Electrolux
Annual Report 2020
Well positioned to
create value
A strong focus on innovation to improve the consumer
experience and a track record of successfully driving cost
efficiency are important competitive assets. A solid balance
sheet facilitates profitable growth. This makes Electrolux
well positioned to continue to deliver shareholder value.
GLOBAL LEADER
Electrolux is a global leader in household
appliances. We reinvent taste, care and
wellbeing experiences for more enjoyable
and sustainable living around the world. We
offer thoughtfully designed, innovative and
sustainable solutions, under well-established
brands including Electrolux, AEG and Frigidaire.
FOCUSED PROFITABLE GROWTH STRATEGY
We focus on consumer-relevant
product innovations to drive profitable
growth. Our global presence offers
economies of scale, and we invest in
digital transformation, modularized
product architectures, automation and
flexibility in production. Sustainability is a
key business driver, and a solid balance
sheet facilitates profitable growth.
Table of contents
CEO STATEMENT
Strategy reinforced in an
5
exceptional year
7
Financials 2020
Driving profitable growth
8
Sustainability at the heart of our strategy 11
13
Creating shareholder value
REPORTING
Report by the Board of Directors
Notes
Proposed distribution of earnings
Auditors’ report
Eleven-year review
Operations by business area, yearly
Quarterly information
Sustainability reporting
Climate-Related Financial Disclosures
Corporate governance report
Remuneration report
Events and reports
Annual General Meeting
14
39
77
78
82
84
85
86
95
100
119
122
123
CONTINUING OPERATIONS
The CEO statement on pages 4–13 in this report includes the
consumer business, continuing operations, following the listing of
the business area Professional Products (Electrolux Professional)
as a separate company in March 2020. Electrolux Professional is
accounted for as discontinued operations, for more information
see Note 26.
The Annual Report for AB Electrolux (publ), 556009-4178,
consists of the Report by the Board of Directors and Notes to the
financial statements, pages 14—77. The Annual Report is publis-
hed in Swedish and English.
ELECTROLUX INVESTOR RELATIONS ONLINE
Please find more information about business development,
strategy and business areas on the Electrolux Investor
Relations webpage:
www.electroluxgroup.com/ir
SUSTAINABILITY
The Electrolux sustainability framework and execution are
described in the Sustainability reporting section on pages 86–94.
The full Electrolux Sustainability Report is published online in
March 2021 at:
www.electroluxgroup.com/sustainabilityreport2020
341
298
Printed matter
Larsson Offsettryck
Electrolux, AEG and Zanussi are registered trademarks of
AB Electrolux. For further information about trademarks, please
contact Electrolux Group Intellectual Property, Trademark.
116
sales
billion sek
48
thousand
employees
60
million products
sold annually
120
markets
The figures above are for the consumer business, continuing operations,
excluding the discontinued Electrolux Professional operations.
Concept, text and production by
Electrolux Investor Relations and Hallvarsson & Halvarsson.
4 CEO statement
Jonas Samuelson,
Electrolux President and CEO
ELECTROLUX ANNUAL REPORT 2020
CEO statement 5
Strategy reinforced in an
exceptional year
The coronavirus pandemic in 2020 had a severe impact on all aspects
of society, including on our consumers and our business. We have all
experienced challenging times but I believe that our execution and
consumers’ response validate that we have the right strategy in place.
The financial performance improved significantly during the year as
a consequence of an attractive product offer and agile execution.
The world is facing a global pandemic
that has affected us all in unprecedented
ways, both personally and professionally.
Our top priorities have been to safeguard
the health and safety of our employees
and to ensure business continuity. Not
least because household appliances are
essential for the daily lives of consumers.
Our strategy as well as our agile way
of working helped us to manage the
challenges and uncertainty, as well as
respond to changing consumer needs,
brought about by the pandemic. I am
pleased how we managed the situation
during the year by quickly adapting to the
changing market, to ensure we took the
right measures at the right time.
Responding to new situations
Following a sharp decline in demand
during the onset of the coronavirus pan-
demic in first half of 2020, we implemented
temporary cost and cash mitigation
actions. These included significantly
reduced discretionary spending and
reprioritizing capital expenditure by
deferring and scaling back investments.
Cost efficiency is a key part of our busi-
ness culture, and the pandemic illustrated
how we as an organization can quickly
respond to a volatile market environment.
Sales increased in the second half of the
year driven mainly by pent-up consumer
demand, people spending more time
at home and government stimulus pro-
grams. Again, our agile business enabled
us to quickly switch from implementing
cost savings to capture the strong
increase in consumer demand.
I am extremely proud of how we as an
organization have navigated this chal-
lenging year that put our entire company
to the test. Importantly, for me it validated
that we have the right strategy in place
and that we quickly can act on challenges
as well as seize opportunities.
sales by brand
sales by region
Other
20%
36%
*
30%
14%
*Includes Frigidaire Gallery and Frigidaire Professional.
Key data
Sales growth,%
Operating margin, %1)
Operating cash flow, SEKm2)
Dividend, SEK per share3)
1) Excluding non-recurring items.
2) Operating cash flow after investments.
3) 2020 proposed by the Board.
2020
3.3
5.0
8,552
8.00
2019
–1.3
3.8
2,280
7.00
ELECTROLUX ANNUAL REPORT 2020
33%
39%
5%
3%
15%
5%
6 CEO statement
Due to the pandemic, consumers spent more time at home during 2020 and became more digital.
The digital consumer –
well-informed and empowered
Our strategy is founded on five industry
trends, with sustainability and increasing
consumer power driven by digitalization
being most important. A consequence
of the coronavirus pandemic was how it
rapidly transformed consumer behavior.
This affected long-term market trends
for example by accelerating consumer
power and digitalization.
Consumers spent more time at home
due to the pandemic and became more
digital. Online purchases increased and
consumers became more interested in
high-quality appliances with features and
benefits that enhance their user experi-
ence. Consumers using their appliances
more intensively during the pandemic
and allocating more of their household
budgets to home improvement projects
also benefitted our sales. This, in combina-
tion with our relentless focus on consumer
experience innovation, has continued
to improve demand for our more highly
featured products, driving a favorable
product mix. We also strengthened our
online marketing and communication
capabilities to capture the growing online
and e-commerce trend. We also saw con-
sumers paying more attention to health
and hygiene in the home environment,
and an increased need for products that
can boost wellbeing in the home, such as
vacuum cleaners, air and water purifiers,
dishwashers and washing machines.
During the pandemic, sustainability
became even more important for con-
sumers. Even before the pandemic, we
knew that two thirds of global consumers
are willing to pay more for sustainable
goods.* These changes in consumer
behavior make our strategy more rele-
vant than ever.
*Eco Ethical Report, June 2019.
Consumer
power
Growing global
middle class
I ND UST RY
TREND S
Digitalization
The global household appliance market
is being transformed by five major trends.
While these changes place demands on
investments and economies of scale, they
also present major opportunities.
Global scale
Sustainabillity
ELECTROLUX ANNUAL REPORT 2020
CEO statement 7
Financials 2020
Business overview
The year was highly volatile with a challenging first half followed
by a strong recovery during the second half. This resulted in a
significant financial performance improvement for the year, with
an operating margin of 5.0% compared to 3.8% last year, exclud-
ing non-recurring items. Electrolux organic sales increased 3.2%,
although more than offset by currency translation relating to the
stronger Swedish Krona, resulting in a small reported net sales
decline.
The organic sales growth was driven by improved mix through
selling more innovative premium products as well as higher net
prices ,while sales of lower-end products were decreased. After-
market sales, which is one of the Group’s strategic focus areas,
increased significantly, accounting for 7% of sales.
In Europe, market demand was positive, both in Eastern
Europe and in Western Europe. For Electrolux operations, brand
and product mix contributed strongly to sales and earnings,
while volumes of lower-end products declined, resulting in higher
sales and operating margin. The premium brands Electrolux and
AEG performed well and gained value market share. Currency
headwinds impacted earnings negatively, while costs for raw
material were lower.
In North America, market demand increased during the year. For
Electrolux operations, both price and mix improved while vol-
umes were lower. The proactive price and mix management, as
well as high growth in aftermarket sales, resulted in a significant
earnings improvement for the year. The improvement was limited,
however, by lower production volumes as a result of capacity
constraints. Those were mostly due to the coronavirus situation
affecting the industry as a whole, but also a result of inefficien-
cies in the ongoing manufacturing consolidation of the U.S.
freezer/fridge production into a new, highly automated facility in
Anderson.
In Latin America consumer demand is estimated to have
increased, driven by the Brazilian market. Electrolux operations
had a positive mix development, partly from increased sales of
high-end products. All main markets had strong growth in online
sales. Significant price increases outweighed large currency
headwinds.
In Asia-Pacific, Middle East and Africa, the Australian market
grew strongly, while markets in Southeast Asia declined due to
lockdowns and recession. For Electrolux operations, both price
and mix developed favorably, while volumes declined slightly.
Electrolux in Australia had a significant organic growth with
price increases and successful product launches. Operational
efficiencies and lower costs for raw material impacted earnings
positively. Operating income and margin improved significantly.
operating income bridge1)
operating margin
SEKbn
10
8
6
4
2
0
3.2
0.3
4.5
-0.6
0.0
5.8
-1.6
EBIT
2019
Organic
contribution
Raw
material
& tariffs
Cost
efficiency
Currency
Acq/
Divest
EBIT
2020
1) Excluding non-recurring items
Our focus on consumer driven innovation continued to impact operating income
(EBIT) positively. Also in 2020, we strengthened our platform for future profitable
growth through additional efficiency measures and extensive re-engineering
investments in automated and modularized manufacturing.
SEKbn
8
6
4
2
0
5.8
5.0
16
17
18
19
20
Operating income
Operating margin
Target, ≥6%
sales growth
capital turnover-rate
return on net assets
SEKbn
125
100
75
50
25
0
116
3.3
16
17
18
19
20
%1)
10
8
6
4
2
0
-2
Net sales
Sales growth
Target, ≥4%
1) Total sales growth excluding
currency translation effects.
Times/year
10
8
6
4
2
0
4.5
16
17
18
19
20
Capital turnover-rate, times/year
Target, ≥4 times/year
SEKbn
30
25
20
15
10
5
0
25.6
22.6
16
17
18
19
20
Average net assets
Return on net assets
Target, >20%
%
8
6
4
2
0
%
30
25
20
15
10
5
0
To reach the growth target, we are
continuing to strengthen our positions in
core markets, new markets and segments.
Reducing the amount of capital tied up in
operations creates opportunities for profit-
able growth.
Sustained profitability and a small, efficient
capital base enable us to achieve a high
long-term return on capital.
Note: Targets are over a business cycle. All figures in the graphs above exclude the discontinued business area Professional Products.
ELECTROLUX ANNUAL REPORT 2020
8 CEO statement
Driving sustainable
consumer experience
innovation
Increasing efficiency through
digitalization, automation
and modularization
Solid balance sheet facilitates
profitable growth
Financial targets for profitable growth*
OPERATING
MARGIN
≥6%
RONA**
>20%
SALES
GROWTH
≥4%
* Financial targets are over a business cycle
** Return on net assets
Strong focus on sustainable consumer experience innovation and increasing
operational efficiency through modularized products in automated production
are key drivers for profitable growth, supported by a solid balance sheet.
Driving profitable growth
Electrolux first financial priority is to reach
our objective of at least 6% operating
margin with high balance sheet efficiency.
Once that is achieved, additional value
will be driven by accelerating profitable
growth of at least 4%. Our two key drivers
for profitable growth are sustainable
consumer experience innovation and
increasing efficiency through modular-
ized products in automated production.
A solid balance sheet enables us to invest
to drive profitable growth.
Sustainable consumer experience
innovation
Product innovation based on consumer
insight enables us to develop our offering
based on the needs and expectations of
consumers. This driver proved to be more
important than ever during the coronavi-
rus pandemic. It continued to guide us in
offering the right type of products that are
preferred by consumers.
The attractive, high-margin aftermar-
ket business is a focus area for us. We
strengthen our position by investing in
digital capability to interact individually
with consumers, extending the service,
consumable and accessories product
offering and promoting consumer loyalty.
We know that strong brands grow
faster, are more profitable and more resil-
ient. Our three main brands Electrolux,
AEG and Frigidaire are all well-estab-
lished and account for around 80% of our
gross profit. They target distinct consumer
groups with potential to attract a larger
audience.
An example of our product innovation
paying off is the external recognition we
received during the year, such as being
top ranked in five different categories
by Reviewed.com in the U.S., including
ELECTROLUX ANNUAL REPORT 2020
CEO statement 9
Three clear innovation areas
We shape living for the better by reinventing taste, care and
wellbeing experiences for more enjoyable and sustainable living.
Taste
Enabling users to prepare great-tasting food.
As a kitchen appliance leader, we want our products to enable
consumers to prepare food with the right taste and texture,
minimize food waste, and create healthy and nutritious meals.
We continuously add new functionalities in terms of control,
interaction and innovative digital technologies.
By enabling consumers to achieve excellent culinary results, we
inspire people to eat and live more enjoyably and sustainably.
The Frigidaire AirFry cooker is one of our commercially success-
ful products that promotes healthier cooking.
Cookers, hobs, ovens, hoods, microwave ovens, refrigerators and freezers.
Care
Enabling users to care for their clothes so they stay new
for longer.
Our laundry products offer consumers outstanding garment care,
water and energy efficiency, and effective low temperature wash-
ing. Demand for Electrolux washing machines and tumble dryers is
driven by innovations that promote user-friendliness and garment
care through tailored and adaptive programs combined with
leading resource efficiency.
We create care solutions that make it easier for consumers to
make better choices for their wardrobe, their life and the planet, so
they can love their clothes for longer. Our Electrolux PerfectCare
800/900 washers in Europe ensure clothes retain their size, shape
and vibrancy, and are wrinkle free.
Washing machines, tumble dryers and dishwashers.
Wellbeing
Enabling users to achieve healthy wellbeing
in their homes.
We strive to create wellbeing products that are differentiated
by their visual appeal, and how they promote healthy indoor
environments and sustainable living. Electrolux vacuum clean-
ers and air-conditioning equipment reduce harmful allergens
and pollutants in the home.
Our high-performance wellbeing solutions are easy to use,
accessible and versatile. The Electrolux PureQ9 vacuum cleaner
is one of our products that efficiently removes fine dust from
floors, while being ergonomic and quiet.
Vacuum cleaners, air-conditioning equipment, water heaters,
heat pumps, small domestic appliances and accessories.
61 %
29 %
10 %
share of sales
Taste
Care
Wellbeing
ELECTROLUX ANNUAL REPORT 2020
10 CEO statement
‘Best refrigerator’ and ‘Best front-load
washer’. We also had great success with
our recently launched built-in kitchen
range under the Electrolux brand in
Europe, read more on page 12.
As a sustainability leader in the appli-
ance industry, we focus on sustainable
product innovation, including improving
energy and water efficiency of our prod-
ucts. During the year, we further inte-
grated sustainability and product R&D
into our consumer experience teams. We
have defined targets and KPIs for each
major product category where efficiency
standards exist.
Modularized products in
automated production
Our SEK 8bn re-engineering investment
program at Electrolux is crucial to
strengthen cost competitiveness and
drive profitable growth through increased
modularization and automation in the
Americas and Europe. Our global modu-
larized product platforms are key to con-
tinue to drive innovation going forward in
a competitive way.
The re-engineering investment at our
Curitiba plant in Brazil was successfully
completed during the year, while our
investments in North America and São
Carlos in Brazil experienced delays due
to the coronavirus situation. This of course
pushes cost savings from these invest-
ments forward, but I want to emphasize
that we still expect our re-engineering
and streamlining initiatives to generate
approximately SEK 3.5bn of annual cost
savings, with full effect from 2024. We are
also accelerating investments in digitally
integrating our manufacturing and
supply chains.
CASE - INCREASING EFFICIENCY THROUGH DIGITALIZATION, AUTOMATION AND MODULARIZATION
Enhancing competitiveness in Brazil
In 2020, Electrolux completed a significant investment in its Curitiba plant in
Brazil to enhance competitiveness through greater efficiency and flexibility.
Electrolux saw the opportunity to make
its Curitiba refrigeration/freezer plant
more competitive by improving cost
effectiveness and increasing flexibility,
while strengthening its position in
the growing two-door refrigerator
segment.
Modularization and new product
platform
When redesigning the Curitiba plant,
standardized global modular product
platforms were used. Product modu-
larization drives profitable growth as
it speeds up innovation by leveraging
global technologies, increases flexi-
bility, and allows a sharpened offering
with more relevant features at a lower
cost with best-in-class quality.
The Curitiba investment enabled a
new product platform geared toward
the two-door refrigerator market. These
new products also promote sustainabil-
ity as they are 30% more energy efficient
than the previous generation and use
refrigerants with lower climate impact.
Increased automation
The level of automation in production
was significantly increased, from 4%
to 23%. In addition, a new warehouse
was built next to the factory with state-
of-the-art automated equipment to
optimize storage and the handling of
inbound and outbound goods. Greater
automation has improved the safety
incident rate by approximately 10%,
reduced direct labor by a quarter
and decreased raw material stock by
almost 20%.
Greater efficiency
High-speed machines were incor-
porated into important production
phases – including some that were
more than twice as productive as pre-
vious equipment, while using less raw
materials and energy. For production
overall, CO2 has been reduced by 11%
and water use by 12% since the invest-
ment began in 2017.
ELECTROLUX ANNUAL REPORT 2020
CEO statement 11
For the Better 2030
Towards carbon neutrality & circularity
Better
solutions
Better
company
Better
Living
Lead in energy- and resource-
efficient solutions
Be climate neutral and drive clean
and resource-efficient operations
Make sustainable eating
the preferred choice
Offer circular products
and business solutions
Act ethically, lead in diversity
and respect human rights
Make clothes last twice as long
with half the environmental impact
Eliminate harmful
materials
Drive supply chain
sustainability
Make homes healthier and more
sustainable through smart solutions
for air, water and floors
Support the UN Sustainable Development Goals and Climate targets
Solid balance sheet
A solid balance sheet is essential as it
enables us to continue to invest in areas
such as consumer experience innova-
tion and re-engineering as well as to
strengthen our positions in emerging
markets.
During the year, we further increased
our liquidity buffer to ensure financial
stability.
Sustainability at the heart of our strategy
In 2020, we launched and began imple-
menting our new For the Better 2030
sustainability framework, which I am con-
fident will maintain our sustainability lead-
ership as a competitive advantage and
driver of profitable growth over the next
decade. In fact, the framework takes our
sustainability ambitions to the next level.
Our ambition is to achieve climate
neutrality by 2050. As around 85% of our
carbon footprint is in the user phase of
our products, our focus is on offering as
energy efficient products as possible to
consumers. Offering efficient products
is our greatest contribution to tackling
climate change, while also boosting
margins. Our most resource-efficient
products have consistently had a higher
margin in recent years, and accounted
for 26% of total units sold and 36% of gross
profit in 2020. I am also particularly proud
of our new long-term incentive program
for senior managers that includes a sub-
stantial climate impact reduction element
to drive our climate action going forward.
But our sustainability agenda goes
far beyond combatting climate change
and the impact of our products – to pro-
actively work with our operations, supply
chain, and the overall circularity of our
CO2 IMPACT
THE ELECTROLUX CLIMATE NEUTRALITY ROADMAP
Target1)
–50%
-39%
1) The target for 2020 was to reduce CO₂ impact by 50%
compared to 2005, focusing on product efficiency
in the main product categories. Sales volumes and
emission factors were normalized to 2005. The
Group’s 50% target was not reached mainly due to
delays in legislation and product efficiency regulation
in key markets.
The 50% target was established in 2013, before
the UN Paris agreement in 2015 and launch of the
Science Based Target (SBT) initiative. The Electrolux
SBT now replaces the 50% target. For more results see
the separate Electrolux Sustainability Report online.
ELECTROLUX ANNUAL REPORT 2020
80% carbon emissions
reduction in operations
25% carbon emissions
reduction in product use
1
Climate neutral operations
2
Climate neutral across the value chain
2015
2020
2025
2030
3
2050
1) Science based target (SBT): Scope 1 + Scope 2 - 80% reduction and Scope 3 - 25% reduction by 2025
2) Company target, Climate neutral operations (Scope 1 + Scope 2 = 0) by 2030
3) United Nations Global Compact Business ambition för 1.5°C - climate neutral value chain by 2050
12 CEO statement
CASE - DRIVING SUSTAINABLE CONSUMER EXPERIENCE INNOVATION
Driving profitable growth through innovation
Built-in kitchen is a key innovation area for Electrolux in Europe where it has further strengthened its position in recent years.
Electrolux has strengthened its premium position in the built-in kitchen area in Europe through
deep consumer insight to drive sales, consumer ratings and profit.
Consumer insight drives innovation
The new built-in kitchen range features
appliances with intuitive user interfaces
that provide real-time guidance to
the user. The Electrolux QuickSelect
dishwasher interface is an excellent
example of identifying real consumer
needs around product use and sustain-
ability. Electrolux QuickSelect has been
appreciated by consumers with a 4.92
star rating out of 5, while net sales and
gross profit have increased by 11%.¹
consumer brand recall was tested and
validated throughout the entire cam-
paign to ensure high success rate. The
result showed that the advertisement
was effective both in terms of boosting
short term sales and having the poten-
tial to build Electrolux brand power in
the long run. Success in the strategic
Polish market has already been mea-
sured and Electrolux is now rated as a
top three brand in Poland following the
successful brand campaign.
The importance of branding and
effective marketing
In early 2019, a sharpened Electrolux
brand was communicated based on
clearly defined attributes such as ‘most
human centric innovation’, ‘leader in
sustainable solutions’ and ‘designed in
Sweden’. This was then developed into
a comprehensive campaign across all
media touchpoints, including TV, and
Delivering profitable growth
Built-in kitchen is a key innovation area
for Electrolux in Europe where it has fur-
ther strengthened its position in recent
years. This has involved sharpening
its range through consumer insight
to better meet consumer needs and
create simply outstanding consumer
experiences. During the second half
of 2019, Electrolux launched its new
built-in kitchen range under a sharp-
ened Electrolux brand.
New products contributed to an
increase in net sales for built-in kitchen
of 5.3% and gross profit of 5.9%.¹
Electrolux has a 22% value market
share of the built-in kitchen market in
Europe and a no 1 or no 2 position
in eight of its key sales clusters.² The
built-in kitchen range has been well
received by the market with consumers
rating it 4.9 stars out of 5 when first
launched.
¹ Nine months 2020 vs nine months 2019.
² September 2020.
ELECTROLUX ANNUAL REPORT 2020
CEO statement 13
business. Our re-engineering program
for example plays a key role in driving
resource efficiency in our operations
to strengthen our competitiveness. The
framework is also intended to inspire and
empower people to make choices that
will help them live more sustainably, while
providing us with engaging new ways to
communicate with consumers.
I would also like to acknowledge the
role of our purpose ‘to shape living for
the better’ in guiding us and supporting
society during what was a difficult year
for many. The Electrolux Food Foundation
made funding available to help people
in need during the pandemic. Working
together with partners and Electrolux
employees, close to half a million meals
were donated to people in need. Our
people also contributed to other health-
care efforts in our various markets.
Creating shareholder value
In March, we made Electrolux Professional
into a separate public entity. This was
the latest in a long history of successful
spin-offs where Electrolux shareholders
received shares in a newly listed company.
The move enables both the consumer and
professional businesses to develop and
flourish on their own given their different
business models. The spin-off has made
us into an even more consumer-focused
business, which I believe helped us navi-
gate the turbulence of last year.
Additionally, the Board of Directors
proposed to reinstate a dividend for the
fiscal year 2019 based on the recovery
in earnings and cash flow. The dividend
of SEK 7 per share was decided at an
Extraordinary General Meeting on
November 3.
I especially want to thank my
colleagues for the great commitment and
professionalism they have shown during
this challenging year due to the corona-
virus pandemic. It has not only affected
how we work but also how we live our
lives. As the pandemic continues into
2021, we are ready to respond in an agile
manner. I am confident that our strategy
ensures we remain well positioned to
deliver long-term shareholder value even
in rapidly changing market conditions.
Stockholm, February 2021
Jonas Samuelson
President and CEO
ELECTROLUX ANNUAL REPORT 2020
Report by the
Board of Directors
Electrolux Professional AB was listed on Nasdaq Stockholm as a separate company on March 23, 2020, and is therefore no longer part of the Electrolux Group. Results for Electrolux Professional,
for the time it was part of the Electrolux Group, are reported as discontinued operations. The comments in this report refer to the consumer business, continued operations, unless otherwise
stated. For information on accounting principles, see Note 1 and Note 26.
Board of Directors’ report and financial statements 15
Report by the
Board of Directors
• Net sales amounted to SEK 115,960m (118,981). The sales growth excluding currency
translation effects was 3.3%.
• Operating income amounted to SEK 5,778m (3,189), corresponding to a margin of
5.0% (2.7). Last year included non-recurring items of SEK –1,344m.
• Income for the period amounted to SEK 3,988m (1,820), corresponding to SEK 13.88 (6.33)
per share.
• Operating cash flow after investments amounted to SEK 8,552m (2,280).
• Electrolux Professional AB was distributed to AB Electrolux shareholders and listed on
Nasdaq Stockholm March 23, 2020.
• The Board proposes a dividend for 2020 of SEK 8.00 (7.00) per share, to be paid
in two installments.
Key data
sekm
Continuing operations
Net sales
Sales growth, %1)
Organic growth, %
Acquisitions, %
Divestments, %
Changes in exchange rates, %
Operating income2)
Operating margin, %
Income after financial items
Income for the period
Earnings per share, SEK3)
Operating cash flow after investments
Return on net assets, %
Capital turnover-rate, times/year
Average number of employees
Net debt/equity ratio
Total Group, including discontinued operations
Income for the period4)
Earnings per share, SEK
Equity per share, SEK
Dividend per share, SEK
Return on equity, %
2020
2019
Change, %
115,960
118,981
–3
3.3
3.2
0.1
—
–5.8
5,778
5.0
5,096
3,988
13.88
8,552
22.6
4.5
–1.3
–1.0
0.0
–0.3
4.3
3,189
2.7
2,456
1,820
6.33
2,280
12.0
4.5
47,543
0.08
48,652
0.34
6,584
22.91
65.10
8.005)
34.1
2,509
8.73
78.55
7.00
11.4
81
108
119
162
1) Change in net sales adjusted for currency translation effects.
2) Operating income for 2019 included non-recurring items of SEK –1,344m. Excluding these items, operating income for 2019 amounted to SEK 4,533m, corre-
sponding to a margin of 3.8%, see Note 7.
3) Basic, based on an average of 287.4 (287.4) million shares for the full year, excluding shares held by Electrolux.
4) Income for the period 2020 included a settlement gain from the distribution of Electrolux Professional of SEK 2,379m.
5) Proposed by the Board of Directors.
AB Electrolux (publ), 556009–4178
Annual Report 2020, page 14–77
Sustainability Reporting 2020, page 86–94
Climate-Related Financial Disclosures, page 95-99
Corporate Governance Report 2020, page 100–118
Remuneration Report 2020, page 119–121
ELECTROLUX ANNUAL REPORT 2020
16 Board of Directors’ report and financial statements
Net sales and income
• Sales decreased by 2.5%. This was a result of negative currency translation effects of 5.8%, while
organic sales increased by 3.2% and acquisitions had a positive impact of 0.1%.
• Operating income amounted to SEK 5,778m (3,189), corresponding to a margin of 5.0% (2.7). Last
year included non-recurring items of SEK –1,344m. Excluding those items, operating income 2019
amounted to SEK 4,533m, corresponding to a margin of 3.8%.
• Mix developed favorably and operating margin improved across all business areas, excluding
non-recurring items.
• Positive price development fully offset significant currency headwinds.
• Income for the period for continuing operations amounted to SEK 3,988m (1,820), corresponding
to SEK 13.88 (6.33) per share.
Financial net
Net financial items amounted to SEK –681m (–733), mainly a
result of lower interest costs.
Income after financial items
Income after financial items amounted to SEK 5,096m (2,456),
corresponding to 4.4% (2.1) of net sales.
Taxes
Total taxes for 2020 amounted to SEK –1,108m (–636),
corresponding to a tax rate of 21.7% (25.9).
Income for the period and earnings per share
Income for the period for continuing operations, amounted to
SEK 3,988m (1,820), corresponding to SEK 13.88 (6.33) in earn-
ings per share before dilution.
Income for the period for the Group, including discontinued
operations, amounted to SEK 6,584m (2,509), corresponding
to SEK 22.91 (8.73) in earnings per share before dilution. The
income for the period for the Group included a settlement gain
from the distribution of Electrolux Professional of SEK 2,379m.
Net sales
Net sales in 2020 amounted to SEK 115,960m (118,981), which
is a decrease of 2.5%. Organic sales increased by 3.2% and
acquisitions had a positive impact of 0.1%, while currency
translation had a negative impact of 5.8%.
All business areas reported organic sales growth. Positive
price development and mix improvements through selling more
innovative premium products contributed to the growth, as
well as increased aftermarket sales. However, sales volumes
decreased.
Operating income
Operating income for 2020 amounted to SEK 5,778m (3,189),
corresponding to a margin of 5.0% (2.7). Last year, operat-
ing income included non-recurring items of SEK –1,344m, see
Note 7.
The increase in operating income was mainly driven by the
organic contribution. Mix developed strongly across business
areas and higher net prices more than offset significant currency
headwinds. Lower costs for raw material impacted operating
income positively.
Operating margin, excluding non-recurring items last year,
increased in all business areas. For more information on the
performance of each business area, see page 18–21.
Effects of changes in exchange rates
Changes in exchange rates had a negative impact of
SEK –1,621m on operating income year-over-year. The impact
of transaction effects was SEK –1,340m. Translation effects
amounted to SEK –281m.
SALES GROWTH
OPERATING MARGIN
SEKM
125,000
100,000
75,000
50,000
25,000
0
%
10
8
6
4
2
0
-2
Net sales
Sales growth
Target: at least 4%
Total sales growth excluding
currency translation effects.
SEKM
8,000
6,000
4,000
2,000
0
%
8
6
4
2
0
Operating income
Operating margin
Operating margin
excl. non-recurring items
Target: at least 6%
For non-recurring items included in
operating income, see Note 7 and page 84.
16
17
18
19
20
16
17
18
19
20
Financial targets are over a business cycle.
For comparable reasons the figures in the graphs above are exclusive of the discontinued business area Professional Products.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 17
Consolidated statement of comprehensive income
note
3, 4
5, 7
5, 7
5, 7
6, 7, 29
3, 8
9
10
26
22
11, 18
11
11
20
20
2020
115,960
–93,689
22,272
–11,071
–5,116
–307
5,778
–681
5,096
–1,108
3,988
2,595
6,584
189
–46
143
32
–3,326
48
–3,246
–3,103
3,481
6,584
0
6,584
3,481
–0
3,481
13.88
9.03
22.91
13.86
9.02
22.88
287.4
287.7
2019
118,981
–99,182
19,799
–12,186
–5,481
1,057
3,189
–733
2,456
–636
1,820
688
2,509
–103
3
–100
–10
1,030
24
1,044
944
3,452
2,509
–1
2,509
3,453
–1
3,452
6.33
2.40
8.73
6.30
2.38
8.69
287.4
288.8
sekm
Net sales
Cost of goods sold
Gross operating income
Selling expenses
Administrative expenses
Other operating income and expenses
Operating income
Financial items, net
Income after financial items
Taxes
Income for the period, continuing operations
Income for the period, discontinued operations
Income for the period
Items that will not be reclassified to income for the period:
Remeasurement of provisions for post–employment benefits
Income tax relating to items that will not be reclassified
Items that may be reclassified subsequently to income for the period:
Cash flow hedges
Exchange–rate differences on translation of foreign operations
Income tax relating to items that may be reclassified
Other comprehensive income, net of tax
Total comprehensive income for the period
Income for the period attributable to:
Equity holders of the Parent Company
Non–controlling interests
Total
Total comprehensive income for the period attributable to:
Equity holders of the Parent Company
Non–controlling interests
Total
Earnings per share
For income attributable to the equity holders of the Parent Company:
Basic, continuing operations, SEK
Basic, discontinued operations, SEK
Basic, total Group, SEK
Diluted, continuing operations, SEK
Diluted, discontinued operations, SEK
Diluted, total Group, SEK
Average number of shares
Basic, million
Diluted, million
ELECTROLUX ANNUAL REPORT 2020
18 Board of Directors’ report and financial statements
Operations by business area
• Strong performance in Europe driven by product and brand mix.
• Improved price and mix in North America more than offset lower volumes and manufacturing transition cost.
• In Latin America positive price and mix outweighed significant currency headwinds. However, earnings
decreased compared to last year, which included positive one-off items.
• Strong organic development in Australia was the main driver for increased operating income in Asia-Pacific,
Middle East and Africa.
Market demand overview
The coronavirus pandemic resulted in more time spent at home.
Several markets benefitted from consumers allocating more of
their household budgets to home improvement in the second
half of 2020.
Market demand for core appliances in Europe increased by
3% in 2020. This was driven by growth of 8% in Eastern Europe
and of 1% in Western Europe. In the U.S., market demand for
core appliances increased by 6%. Market demand in Brazil is
estimated to have increased in 2020, while demand in Argentina
and Chile is estimated to have declined, due to restrictions to
limit the spread of the coronavirus and political instability. In
Asia-Pacific, Middle East and Africa, overall consumer demand
for appliances is estimated to have declined in 2020, mainly due
to lockdowns to limit the spread of the coronavirus and reces-
sions. However, consumer demand in Australia, one of Electrolux
main markets, grew strongly.
INDUSTRY SHIPMENTS FOR CORE APPLIANCES IN THE U.S.
INDUSTRY SHIPMENTS FOR CORE APPLIANCES IN EUROPE
MILLION UNITS
MILLION UNITS
55
51
47
43
39
35
105
100
95
90
85
80
A total of approximately
51 million core
appliances were sold
in the U.S. in 2020.
A total of approximately
103 million core
appliances were sold
in Europe in 2020.
02
04
06
08
10
12
14
16
18
20
Source: AHAM.
02
04
06
08
10
12
14
16
18
20
Source: Electrolux estimates, as from 2018, market volumes
in Eastern Europe have been revised, considering additional
sources.
For other markets there are no comprehensive market statistics.
Business areas
Electrolux operations are organized into four regional business
areas: Europe, North America, Latin America and
Asia-Pacific, Middle East and Africa. The Group’s operations
include products for consumers comprising of major appli-
ances, e.g. refrigerators, freezers, cookers, dryers, washing
machines, dishwashers, room air-conditioners and microwave
ovens. Floor-care products, water heaters, heat pumps, small
domestic appliances as well as consumables, accessories and
service are other important areas for Electrolux.
SHARE OF SALES BY BUSINESS AREA
Europe, 40%
North America, 33%
Latin America, 14%
Asia-Pacific, Middle East and Africa, 13%
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 19
Financial overview by business area, continuing operations
sekm
Net sales
Operating income:
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Other, Group common costs, etc.
Total
Operating margin, %
Operating margin excl. non-recurring items, %1)
1) For more information on non-recurring items, see Note 7.
2020
115,960
3,643
1,215
666
1,038
–783
5,778
5.0
5.0
2019
Change, %
118,981
2,493
–516
1,821
446
–1,055
3,189
2.7
3.8
–3
46
n.m.
–63
133
26
81
Europe
Market demand in Europe increased by 3% in 2020. This was
driven by growth in Eastern Europe of 8% and in Western Europe
of 1%.
Electrolux operations reported an organic sales growth of
3.3% in 2020 driven by improvement in brand and product mix,
while volumes of lower-end products declined. The improved
product mix was mainly driven by the focus areas built-in kitchen
and premium laundry products and the business area gained
value market share in its premium brands Electrolux and AEG.
The strategically important aftermarket sales also increased.
Operating income and margin improved year-over-year,
excluding the non-recurring items last year, see Note 7. This was
mainly driven by improved mix as well as lower raw material
costs. Currency headwinds impacted earnings negatively.
KEY FIGURES
sekm
Net sales
Organic growth, %
Acquisitions, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
NET SALES AND OPERATING MARGIN
2020
2019
46,038
45,420
3.3
—
1.7
0.1
3,643
2,493
7.9
7.9
1,406
153.8
2,155
5.5
7.1
1,429
113.5
2,399
SEKM
50,000
40,000
30,000
20,000
10,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
16
17
18
19
20
Average number of employees
17,661
17,943
1) For information on non-recurring items, see Note 7 and page 84.
ELECTROLUX ANNUAL REPORT 2020
20 Board of Directors’ report and financial statements
North America
Market demand for core appliances in the U.S. increased by
6% in 2020. Market demand for all major appliances, including
microwave ovens and home-comfort products, increased by 4%.
Electrolux operations in North America reported an organic
sales increase of 0.9%. Both price and mix improved, while
volumes were lower. Volumes were impacted by capacity
constraints, mostly due to the coronavirus situation affecting the
industry as a whole, but also as a result of inefficiencies related
to the ongoing manufacturing consolidation for refrigerators
and freezers.
Operating income and margin improved year-over-year,
excluding non-recurring items last year, see Note 7. Positive
price and mix development more than offset negative effects
from lower volumes and cost inefficiencies related to the manu-
facturing consolidation and the pandemic. High growth of
aftermarket sales also contributed to earnings.
KEY FIGURES
sekm
Net sales
Organic growth, %
Divestments, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
NET SALES AND OPERATING MARGIN
2020
2019
38,219
38,954
0.9
—
1,215
3.2
3.2
6,086
16.3
1,772
–8.7
–1.0
–516
–1.3
1.4
6,496
–8.3
2,573
SEKM
50,000
40,000
30,000
20,000
10,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
8
6
4
2
0
-2
16
17
18
19
20
Average number of employees
11,551
11,287
1) For information on non-recurring items, see Note 7 and page 84.
Latin America
Overall consumer demand for core appliances in Latin America
is estimated to have increased in 2020, driven by Electrolux main
market Brazil. In Argentina, the demand is estimated to have
declined significantly due to restrictions to limit the coronavirus
pandemic and political instability. The market demand in Chile is
estimated to have decreased slightly.
Electrolux operations in Latin America reported an organic
sales growth of 10.0% in 2020, even though net sales declined
due to the negative currency translation effect. The organic
sales growth was mainly driven by Brazil but also by Argentina
and Chile. Both higher price and mix improvement contrib-
uted, as well as higher sales volumes in Brazil. Aftermarket
sales increased and all main markets had strong growth in
online sales.
Operating income decreased year-over-year, excluding
non-recurring items last year, see Note 7. Volumes declined
but mix developed favorably, partly driven by increased sales
of high-end products. Significant price increases outweighed
large currency headwinds. Efficiency initiatives driven mainly by
digital trasformation impacted positively. Last year, operating
income included a positive impact related to operational taxes
and a reversal of provision in Brazil.
KEY FIGURES
sekm
Net sales
Organic growth, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
Average number of employees
1) For information on non-recurring items, see Note 7 and page 84.
NET SALES AND OPERATING MARGIN
SEKM
25,000
20,000
15,000
10,000
5,000
0
2020
2019
16,915
19,653
10.0
666
3.9
3.9
10.9
1,821
9.3
3.7
4,526
7,044
11.9
665
27.1
956
9,391
10,230
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
-2
16
17
18
19
20
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 21
Asia-Pacific, Middle East and Africa
Overall consumer demand for appliances is estimated to have
declined in the region in 2020, mainly due to lockdowns to
limit the spread of the coronavirus and recessions. However,
demand in Australia, one of Electrolux main markets, grew
strongly as household consumption increased significantly.
Electrolux reported an organic sales growth of 1.7%. Both
price and mix developed favorably, while volumes declined
slightly. Electrolux in Australia had a significant organic growth
with price increases and successful product launches.
Operating income and margin increased year-over-year,
excluding non-recurring items last year, see Note 7. The posi-
tive organic development from price and mix contributed to the
improvement as well as operational efficiencies and lower costs
for raw material. Currency headwinds impacted operating
income negatively.
KEY FIGURES
sekm
Net sales
Organic growth, %
Acquisitions, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
Average number of employees
1) For information on non-recurring items, see Note 7 and page 84.
NET SALES AND OPERATING MARGIN
2020
2019
14,788
14,954
1.7
0.6
1,038
7.0
7.0
–1.3
0.1
446
3.0
5.6
3,996
6,062
20.3
562
7.4
456
7,526
7,919
SEKM
15,000
12,000
9,000
6,000
3,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
16
17
18
19
20
Other facts
Changes in Group Management during 2020
On March 16, 2020 it was announced that Adam Cich would
replace Dan Arler as new head of the business area Asia-Pacific,
Middle East and Africa with immediate effect. Adam Cich was
also appointed Executive Vice President.
On August 18, 2020 it was announced that Jan Brockmann
would resign from his position as Chief Operations Officer on
September 30, 2020. On September 16, 2020 it was announced
that Carsten Franke had been appointed new Chief Operations
Officer and Executive Vice President as from October 1, 2020.
Asbestos litigation in the U.S.
Litigation and claims related to asbestos are pending against
the Group in the U.S. Almost all of the cases refer to externally
supplied components used in industrial products manufac-
tured by discontinued operations prior to the early 1970s. The
cases involve plaintiffs who have made substantially identical
allegations against other defendants who are not part of the
Electrolux Group.
As of December 31, 2020, the Group had a total of 3,403 (3,897)
cases pending, representing approximately 3,440 (approxi-
mately 3,933) plaintiffs. During 2020, 930 new cases with approx-
imately 931 plaintiffs were filed and 1,424 pending cases with
approximately 1,424 plaintiffs were resolved.
The Group continues to operate under a 2007 agreement
with certain insurance carriers who have agreed to reimburse
the Group for a portion of its costs relating to certain asbestos
lawsuits. The agreement is subject to termination upon 60 days
notice and if terminated, the parties would be restored to their
rights and obligations under the affected insurance policies.
It is expected that additional lawsuits will be filed against
Electrolux. It is not possible to predict the number of future
lawsuits.
In addition, the outcome of asbestos lawsuits is difficult to
predict and Electrolux cannot provide any assurances that
the resolution of these types of lawsuits will not have a mate-
rial adverse effect on its business or on results of operations
in the future.
For information on certain additional legal proceedings, see Note 25 Contingent liabilities.
ELECTROLUX ANNUAL REPORT 2020
22 Board of Directors’ report and financial statements
In the balance sheet as per December 31, 2019, assets and liabilities of Electrolux Professional have been reclassified as ‘Discontinued operations, assets held for distribution’ and ‘Discontinued
operations, liabilities held for distribution’ respectively. Working capital and net assets items below exclude assets and liabilities of Electrolux Professional for both 2020 and 2019.
Financial position
• Equity/assets ratio was 23.6% (23.6).
• Return on equity was 34.1% (11.4).
• Return on net assets was 22.6% (12.0).
• Financial net cash position amounted to SEK 4,741m, compared to a financial net debt position
of SEK 667m end of 2019.
Working capital and net assets
Working capital as of December 31, 2020, amounted to
SEK –19,191m (–17,390), corresponding to –17.9% (–14.8) of
annualized net sales. Operating working capital amounted to
SEK 1,851m (3,149), corresponding to 1.7% (2.7) of annualized
net sales.
Average net assets were SEK 25,563m (26,532),
corresponding to 22.0% (22.3) of annualized net sales.
Return on net assets was 22.6% (12.0).
Working capital and net assets
sekm
Inventories
Trade receivables
Accounts payable
Operating working capital
Provisions
Prepaid and accrued income and expenses
Taxes and other assets and liabilities
Working capital
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other non-current assets
Deferred tax assets and deferred tax liabilities
Net assets
Annualized net sales2)
Average net assets
Annualized net sales3)
Return on net assets, %
1) Annualized, see Note 31.
2) Calculated at end of period exchange rates.
3) Calculated at average exchange rates.
Dec. 31, 2020
% of net sales1)
Dec. 31, 2019
% of net sales1)
13,213
19,944
–31,306
1,851
–8,083
–12,777
–181
–19,191
20,452
2,351
6,369
4,696
5,588
20,265
107,142
25,563
115,960
22.6
12.3
18.6
–29.2
1.7
–17.9
18.9
22.0
16,194
20,847
–33,892
3,149
–8,183
–11,748
–608
–17,390
21,803
2,811
7,071
5,820
6,057
26,172
117,519
26,532
118,981
12.0
13.8
17.7
–28.8
2.7
–14.8
22.3
22.3
Liquid funds
Liquid funds as of December 31, 2020, amounted to
SEK 20,467m (11,189), excluding back-up credit facilities.
Electrolux strengthened its liquidity buffer during the year to
secure financial stability in a volatile environment as a conse-
quence of the pandemic. Electrolux has an unused committed
back-up multi- currency revolving credit facility of EUR 1,000m,
approximately SEK 10,057m, maturing 2023, a revolving credit
facility of SEK 3,000m, maturing 2021 and a revolving credit
facility of SEK 10,000m, maturing 2025.
Liquidity profile
sekm
Liquid funds
% of annualized net sales1)
Net liquidity
Fixed interest term, days
Effective annual yield, %
Dec. 31, 2020 Dec. 31, 2019
20,467
40.6
18,864
17
0.5
11,189
18.4
7,569
12
0.8
1) Liquid funds in relation to net sales, see Note 31 for definition.
For additional information on the liquidity profile, see Note 18.
CAPITAL TURNOVER-RATE
RETURN ON NET ASSETS
TIMES/YEAR
8
6
4
2
0
Capital turnover-rate
Target: at least 4 times/year
SEKM
30,000
22,500
15,000
7,500
0
Average net assets
Return on net assets
Target: >20%
%
40
30
20
10
0
16
17
18
19
20
16
17
18
19
20
Financial targets are over a business cycle.
For comparable reasons the figures in the graphs above are exclusive of the discontinued business area Professional Products.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 23
note
December 31, 2020
December 31, 2019
12
8
13
13
29
10
18
22
14
15
17, 18
18
16
18
18
26
20
20
20
20
18
8
10
22
23
18
24
18
8
18
23
26
20,452
21,803
2,351
6,369
3,480
274
6,064
65
1,272
878
2,811
7,071
3,817
424
6,618
93
1,043
1,486
41,205
45,166
13,213
19,944
894
135
3,846
172
20,196
—
58,399
99,604
1,545
2,905
–4,593
18,846
18,702
7
18,709
14,123
1,834
476
4,951
5,567
26,952
31,306
562
17,114
1,329
784
332
2,516
—
53,943
80,894
99,604
16,194
20,847
913
192
4,465
190
10,807
8,034
61,642
106,808
1,545
2,905
–1,351
19,468
22,566
8
22,574
8,236
2,333
561
4,909
5,577
21,616
33,892
883
16,821
3,354
817
293
2,606
3,951
62,617
84,233
106,808
Consolidated balance sheet
sekm
ASSETS
Non-current assets
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other intangible assets
Investments in associates
Deferred tax assets
Financial assets
Pension plan assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade receivables
Tax assets
Derivatives
Other current assets
Short-term investments
Cash and cash equivalents
Discontinued operations, assets held for distribution
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Parent Company
Share capital
Other paid-in capital
Other reserves
Retained earnings
Non-controlling interests
Total equity
Non-current liabilities
Long-term borrowings
Long-term lease liabilities
Deferred tax liabilities
Provisions for post-employment benefits
Other provisions
Total non-current liabilities
Current liabilities
Accounts payable
Tax liabilities
Other liabilities
Short-term borrowings
Short-term lease liabilities
Derivatives
Other provisions
Discontinued operations, liabilities held for distribution
Total current liabilities
Total liabilities
Total equity and liabilities
ELECTROLUX ANNUAL REPORT 2020
24 Board of Directors’ report and financial statements
Net debt items as per December 31, 2019, exclude assets and liabilities of Electrolux Professional. Equity as per December 31, 2019, includes Electrolux Professional.
Cont. Financial position
Net debt
As of December 31, 2020, Electrolux had a financial net cash
position (excluding lease liabilities and post-employment
provisions) of SEK 4,741m, compared to the financial net debt
position of SEK 667m as of December 31, 2019. Net provisions
for post-employment benefits was SEK 3,679m (3,866) and lease
liabilities amounted to SEK 2,618m (3,150) as of December 31,
2020. In total, net debt amounted to SEK 1,556m, a decrease by
SEK 6,127m compared to SEK 7,683m per December 31, 2019.
Net debt
sekm
Short-term loans
Short-term part of long-term loans
Trade receivables with recourse
Short-term borrowings
Financial derivative liabilities
Accrued interest expenses and pre-
paid interest income
Total short-term borrowings
Long-term borrowings
Total borrowings2)
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and
accrued interest income
Dec. 31, 2020 Dec. 31, 20191)
1,012
277
40
1,329
210
64
1,603
14,123
15,727
1,307
1,446
602
3,354
233
33
3,620
8,236
11,856
20,196
10,807
172
81
18
190
176
16
Liquid funds
20,467
11,189
Financial net debt
Lease liabilities
Net provisions for post-employment
benefits
Net debt
Net debt/equity ratio
Total equity
Equity per share, SEK
Return on equity, %
Equity/assets ratio, %
–4,741
2,618
3,679
1,556
0.08
18,709
65.10
34.1
23.6
667
3,150
3,866
7,683
0.34
22,574
78.55
11.4
23.6
1) Electrolux Professional was primarily financed through intra-group loans of approximately
SEK 1.2bn from Electrolux, included in net debt as per December 31, 2019, shown above.
These loans were repaid in connection with the listing of Electrolux Professional on
March 23, 2020.
2) Whereof interest-bearing liabilities amounting to SEK 15,412m as of December 31, 2020,
and SEK 10,989m as of December 31, 2019.
Long-term borrowings and long-term borrowings with maturi-
ties within 12 months amounted to a total of SEK 14,400m as of
December 31, 2020 with average maturity of 2.8 years, com-
pared to SEK 9,682m and 3.0 years at the end of 2019. During
2021, long-term borrowings amounting to approximately
SEK 0.3bn will mature.
The Group’s target for long-term borrowings includes an
average time to maturity of at least two years, an even spread
of maturities and an average interest-fixing period between
0 and 3 years. A maximum of SEK 5,000m of the long-term
borrowings is allowed to mature in a 12-month period. In March
2020, to ensure financial flexibility and to mitigate the potential
impact from the coronavirus pandemic, the Board of Directors
approved a temporary exception from the long-term borrowing
limits. The maximum amount of long-term borrowings maturing
in any given 12-months period was SEK 5,744m at the end of
2020. At year-end, the average interest- fixing period for long-
term borrowings was 1.6 years (1.5).
At year-end, the average interest rate for the Group’s total
interest-bearing borrowings was 1.6% (1.6).
Rating
Electrolux has an investment-grade rating from S&P Global
Ratings, A- with a stable outlook.
Rating
S&P Global
Ratings
Long-term
debt
Outlook
Short-
term debt
Short-term
debt, Nordic
A-
Stable
A-2
K-1
Net debt/equity and equity/assets ratio
The net debt/equity ratio was 0.08 (0.34). The equity/assets
ratio was 23.6% (23.6).
Equity and return on equity
Total equity as of December 31, 2020, amounted to SEK 18,709m
(22,574), which corresponds to SEK 65.10 (78.55) per share.
Return on equity was 34.1% (11.4), impacted by a settlement
gain from the distribution of Electrolux Professional. Adjusted for
the settlement gain, return on equity was 21.7% (11.4).
LONG-TERM BORROWINGS, BY MATURITY
NET DEBT/EQUITY RATIO1)
EQUITY/ASSETS RATIO1)
SEKM
5,000
4,000
3,000
2,000
1,000
0
In 2021, long-term borrowings
in the amount of approximately
SEK 0.3bn will mature. For information
on borrowings, see Note 2 and 18.
21
22
23
24
25
26-
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
%
50
40
30
20
10
0
11
12
13
14
15
16
17
18
19
20
11
12
13
14
15
16
17
18
19
20
1) Both ratios were significantly affected from 2012 and onwards by the changed
pension accounting from the updated IAS 19 Employee Benefits.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 25
Changes in consolidated equity
Attributable to equity holders of the Parent Company
sekm
Opening balance, January 1, 2019
Effect from change in accounting principles
Adjusted opening balance
Income for the period
Cash flow hedges
Exchange differences on translation of foreign operations
Remeasurement of provisions for post-employment benefits
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payments
Dividend
Acquisition of non-controlling interest
Total transactions with equity holders
Closing balance, December 31, 2019
Income for the period
Cash flow hedges
Exchange differences on translation of foreign operations
Remeasurement of provisions for post-employment benefits
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payments
Dividend1)
Acquisition of non-controlling interest
Total transactions with equity holders
Closing balance, December 31, 2020
Other
paid-in
capital
Other
reserves
Retained
earnings
Share
capital
1,545
—
1,545
—
—
—
—
—
—
—
—
—
—
—
2,905
–2,394
—
—
2,905
–2,394
—
—
—
—
—
—
—
—
—
—
—
—
–10
1,029
—
24
1,044
1,044
—
—
—
—
1,545
2,905
–1,351
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
32
–3,322
—
48
–3,242
–3,242
—
—
—
—
1,545
2,905
–4,593
19,683
–234
19,450
2,509
—
—
–103
3
–100
2,409
52
Total
21,738
–234
21,504
2,509
–10
1,029
–103
27
944
3,453
52
–2,443
–2,443
—
–2,391
19,468
6,584
—
–4
189
–46
140
6,723
70
—
–2,391
22,566
6,584
32
–3,326
189
2
–3,102
3,481
70
–7,415
–7,415
—
–7,345
18,846
—
–7,345
18,702
Non-
controlling
interests
11
—
11
–1
—
0
—
—
—
–1
—
–1
–1
–2
8
0
—
–0
—
—
–0
–0
—
–0
–0
–0
7
Total
equity
21,749
–234
21,515
2,509
–10
1,029
–103
27
944
3,452
52
–2,443
–1
–2,393
22,574
6,584
32
–3,326
189
2
–3,103
3,481
70
–7,415
–0
–7,346
18,709
1) 2020: Dividend payment to shareholders SEK 2,012m. Distribution of Electrolux Professional AB of SEK 5,403m, equivalent to the fair market value of Electrolux Professional at listing at Nasdaq
Stockholm on March 23, 2020.
For more information on share capital, number of shares and earnings per share, see Note 20.
ELECTROLUX ANNUAL REPORT 2020
26 Board of Directors’ report and financial statements
Cash flow
• Operating cash flow after investments amounted to SEK 8,552m (2,280).
• Capital expenditure amounted to SEK 5,338m (6,674).
• R&D expenditure amounted to 3.3% (3.3) of net sales.
Operating cash flow after investments
Operating cash flow after investments in 2020 amounted to
SEK 8,552m (2,280). The year-over-year comparison reflects an
increased operating income, a lower level of investments as well
as a more favorable development of operating assets and liabil-
ities. As a result of the strong market demand during the second
half of the year that could not fully be met, inventory levels were
low at the same time as procurements were high.
Capital expenditure
Capital expenditure in property, plant and equipment in 2020
amounted to SEK 4,325m (5,320). The investments were mainly
related to new products and architectures, manufacturing effi-
ciency, automation and re-engineering. Including investments
in product development and software, capital expenditure
amounted to SEK 5,338m (6,674), corresponding to 4.6% (5.6) of
net sales.
Cash flow
sekm
Capital expenditure by business area
2020
2019
sekm
Operating income adjusted for non-cash items1)
10,807
9,746
Europe
Change in operating assets and liabilities
2,852
–498
% of net sales
Operating cash flow
13,659
9,248
North America
Investments in tangible and intangible assets
–5,338 –6,674
% of net sales
Changes in other investments
230
–294
Latin America
Operating cash flow after investments
8,552
2,280
% of net sales
Acquisitions and divestments of operations
–8
–27
Asia-Pacific, Middle East and Africa
Operating cash flow after structural changes
Financial items paid, net2)
Taxes paid
Cash flow from operations and investments
Payment of lease liabilities
Dividend
Share-based payments
Total cash flow, excluding changes in loans and
short-term investments
8,544
2,254
–596
–656
–1,132 –1,277
6,816
–911
321
–870
–2,012 –2,443
0
9
3,894 –2,982
1) Operating income adjusted for depreciation and amortization and other non-cash items.
2) For the period January 1 — December 31, 2020. Interests and similar items received
SEK 72m (74), interests and similar items paid SEK –397m (–495) and other financial items
paid SEK –163m (–110). Interest paid related to lease liabilities SEK –108m (–124).
% of net sales
Other
Total
% of net sales
R&D expenditure
The expenditure for research and development in 2020,
including capitalization of SEK 563m (788), amounted to
SEK 3,799m (3,899) corresponding to 3.3% (3.3) of net sales.
2020
2019
2,155
2,399
4.7
5.3
1,772
2,573
4.6
665
3.9
562
3.8
183
6.6
956
4.9
456
3.0
290
5,338
6,674
4.6
5.6
OPERATING CASH FLOW AFTER INVESTMENTS1)
CAPITAL EXPENDITURE1)
SEKM
10,000
8,000
6,000
4,000
2,000
0
SEKM
8,000
6,000
4,000
2,000
0
Operating cash flow after invest-
ments in 2020 for continuing operations
amounted to SEK 8,552m (2,280).
16
17
18
19
20
16
17
18
19
20
1)The figures for 2018, 2019 and 2020 are for continuing operations, exclusive of Electrolux Professional.
Capital expenditure
Depreciation and amortization
Capital expenditure in 2020 for
continuing operations including product
development and software amounted to
SEK 5,338m (6,674).
ELECTROLUX ANNUAL REPORT 2020
Consolidated cash flow statement
sekm
Operations
Operating income from continuing operations
Depreciation and amortization1)
Other non-cash items
Financial items paid, net2)
Taxes paid
Cash flow from operations, excluding change in operating assets and liabilities
Change in operating assets and liabilities
Change in inventories
Change in trade receivables
Change in accounts payable
Change in other operating assets, liabilities and provisions
Cash flow from change in operating assets and liabilities
Cash flow from operations
Investments
Acquisition of operations
Capital expenditure in property, plant and equipment
Capital expenditure in product development
Capital expenditure in software and other intangibles
Other
Cash flow from investments
Cash flow from operations and investments
Financing
Change in short-term investments
Change in short-term borrowings
New long-term borrowings
Amortization of long-term borrowings3)
Payment of lease liabilities
Dividend
Share-based payments
Cash flow from financing
Total cash flow, continuing operations
Board of Directors’ report and financial statements 27
note
2020
2019
5,778
4,587
442
–596
–1,132
9,079
1,236
–2,401
1,737
2,279
2,852
11,932
–8
–4,325
–563
–450
230
–5,115
6,816
16
–308
9,793
–4,555
–911
–2,012
0
2,023
8,839
26
12
13
13
18
18
3,189
4,821
1,736
–656
–1,277
7,813
–437
–604
67
476
–498
7,314
–27
–5,320
–788
–566
–294
–6,994
321
–13
854
3,810
–2,376
–870
–2,443
9
–1,028
–707
297
–411
11,697
172
—
11,458
Total cash flow, discontinued operations
26
1,177
Total cash flow, total Group
Cash and cash equivalents at beginning of period
Exchange-rate differences referring to cash and cash equivalents
Cash and cash equivalents in distributed operations
Cash and cash equivalents at end of period4)
10,016
11,458
–667
–611
20,196
1) Depreciation related to right-of-use assets amounted to SEK –876m (–876).
2) Interest and similar items received SEK 72m (74), interest and similar items paid SEK –397m (–495) and other financial items received/paid SEK –163m (–110).
Interest paid related to lease liabilities SEK –108m (–124).
3) For 2020, the amount includes loan repurchases and early repayment of loan of SEK 3,085m.
4) The difference between Cash and cash equivalents for full year 2019 in the Consolidated cash flow statement and Consolidated balance sheet corresponded
to the cash and cash equivalents of Electrolux Professional amounting to approximately SEK 0.6bn.
ELECTROLUX ANNUAL REPORT 2020
28 Board of Directors’ report and financial statements
Risk management
Electrolux continuously monitors its identified key risks as well
as new and evolving risks, aiming to respond flexibly to internal
or external changes. The structured process to monitor and
coordinate the risk management related activities are super-
vised and directed by the Enterprise Risk Management (ERM)
Board. Both the risk appetite as well as the approach to moni-
tor, assess and follow-up are also reviewed regularly by Group
Management to ensure that they are up to date and adapted to
Electrolux strategy.
Risks are categorized based on two dimensions: their poten-
tial consequences on Electrolux operations and the operation’s
vulnerability to them. Key risks are those deemed to have an
extreme or high impact on the Group’s financial result if material-
ized, but also emerging risks or risks not sufficiently understood
with potential high impact are included. More information
regarding the ERM process can be found in the Corporate
governance report.
Electrolux identified strategic, external and internal key risks
are presented below. Financial risks are presented in more
detail in Note 2, Financial risk management. Risks related
to sustainability are detailed in the Sustainability reporting.
Climate-related risks are discussed in the section on Climate-
Related Financial Disclosures.
Strategic risks
Major shifts in the industry
As the society is becoming more digital consumer behavior
changes, leading to structural shifts in many industries, including
consumer goods. This shift has accelerated as a consequence
of the coronavirus pandemic. Electrolux sees many opportuni-
ties deriving from the development but also prepares for risks.
One potential emerging risk is that the company fails to reach
strategic goals due to a lack of business agility and an inability
to anticipate external developments. The Group is carefully
monitoring the evolving competitive landscape including
new operators and business models, changes in alliances and
increased competition.
Innovation capability
Electrolux ability to invest in growth and innovation, including
new markets and segments, is crucial for its strategy. Not exe-
cuting on the Group’s strategic priorities in a timely manner may
affect the Group’s delivery of sustainable consumer experience
innovation and profitable growth. Therefore, portfolio manage-
ment is essential for Electrolux, ensuring the right allocation of
resources for relevant innovation in the product and service
categories.
Digital transformation
Digital transformation through automation, modularization
and digital manufacturing is part of Electrolux ambition to drive
operational excellence. It is crucial for the Group to execute on
its re-engineering programs within operations to adapt to the
rapidly changing industry and consumer needs and to continue
to be cost efficient. An inability to follow through on the initia-
tives may lead to lower performance, delays or higher costs.
Digitalization and automation in manufacturing and supply
chain processes also results in an emerging risk related to the
inability to attract and train personnel for the new skills required.
Electrolux therefore closely monitors its re-engineering projects,
continuously evaluates their impact on the business and refines
its recruitment processes and training programs.
External risks
Geopolitical risks
Electrolux closely monitors events which may have negative
impact on the macroeconomic or geopolitical factors affecting
its markets. Political instability has increased during the last year,
due to events such as Brexit in Europe, Hong Kong in Asia, the
trade war between the U.S. and China and the South China Sea
disputes. The development may lead to economic downturn
and changed consumer behaviors impacting the Group’s sales
negatively.
Instabilities and emerging new geopolitical areas of concern
can also affect Electrolux costs for raw material and transporta-
tion as well as currency exchange rate development, which in
turn affect the financial result of the Group. Electrolux continu-
ously works on business continuity plans based on possible
consequences of such events.
Change +/-
Pre-tax earnings
impact -/+, sekm
Sensitivity analysis year-end 2020
Risk
Raw materials1)
Carbon Steel
Stainless Steel
Plastics
Currency2) and interest rates
USD to EUR
EUR to GBP
USD to BRL
USD to CAD
EUR to CHF
THB to AUD
CNY to USD
EUR to CZK
EUR to RUB
USD to VND
Translation exposure to SEK3)
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
Interest rate
1 percentage point
1) Changes in raw materials refer to Electrolux prices and contracts, which may differ
from market prices.
2) Transactional exposure. Translation effects not included.
3) Assuming the Swedish krona appreciates/depreciates against all other currencies.
400
200
350
390
230
230
220
200
140
140
100
90
90
670
80
RAW MATERIALS EXPOSURE 2020
Carbon steel, 38%
Plastics, 32%
Stainless steel, 17%
Copper and aluminum, 12%
Other, 1%
In 2020, Electrolux, continuing operations, purchased
raw materials for approximately SEK 12bn. Purchases
of steel accounted for the largest part.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 29
key risk that Electrolux is monitoring is the inability to transport
finished goods from Electrolux plants to warehouses. A global
pandemic like the coronavirus, natural catastrophes, politi-
cal unrest or large fires impact global suppliers and the sup-
ply chain. This causes manufacturing and delivery disruptions
which may impact customers significantly as well as increase
costs associated with layoffs, manufacturing adaptation, etc.
Electrolux builds and adapts its business continuity plans to
address these key risks and also collaborates with selected
major suppliers to also monitor some of their major risks.
IT and cyber risks
The digital transformation of the global economy, and of
Electrolux more specifically, leads to great opportunities. As
Electrolux uses technology to speed up the transfer of informa-
tion, it also creates greater potential risks. Electrolux continu-
ously prepares for attacks by assessing its cyber risk profile,
remediates where recommended and proactively manages its
defence. The coronavirus increased the cyber risks, with most of
the Group’s employees working from home. Cyber security con-
trol failures have become an emerging risk closely monitored by
Electrolux. Specific trainings have been performed to improve
awareness. IT failures, for example in key applications or hard-
ware, may also have significant impacts on delivery, produc-
tion, sales and other critical systems and functions. Electrolux IT
constantly monitors these risks.
Compliance related risks
Electrolux is exposed to sustainability factors such as human
rights, employment conditions and corruption. Violation of anti-
corruption legislation could lead to large fines or administrative,
civil or criminal sanctions. To mitigate these risks, Electrolux has
extensive internal governance documents and policies and
conducts training for employees.
Key people and talents
Evolving industry trends and new technologies require new
talents in key areas. The inability to attract competences for
the future, or a lack of strong succession planning, may impact
Electrolux position in the market negatively. An emerging risk for
Electrolux is also the inability to attract talents, by not being able
to accomodate their post-pandemic work preferences. The
Group builds and continuously reviews its talent pipeline and
adapt its work conditions to mitigate these risks.
Risks, risk management and risk exposure are described in more detail in Note 1 Accounting
principles, Note 2 Financial risk management and in Note 18 Financial instruments.
Regulatory risks
Electrolux is subject to a vast range of regulations, laws and
industry standards. As the regulatory landscape evolves, it is
important to monitor and mitigate risks related to legal and
product regulatory compliance, antitrust, trade rules, contrac-
tual risks, protection of IP/Patents, confidential information,
Personal Data Protection, insider information etc. Non-com-
pliance could lead to sanctions, fines, higher costs or inability
to continue manufacturing some products. In addition, the
development regarding sustainability ambitions can result in
new regulatory requirements. To mitigate these risks, Electrolux
has inhouse lawyers, in all business areas as well as centrally, to
monitor regulation changes and to attend to compliance mat-
ters. Regular training for employees is among the most impor-
tant actions.
Market risks
A financial crisis and an economic downturn may affect con-
sumers’ purchasing power and behavior, resulting in a lower
market demand that could impact Electrolux sales. Major
changes in society, for instance resulting from pandemics, can
lead to emerging risks such as changes in consumer behav-
ior. To mitigate these risks, Electrolux closely follows market
and sales developments and changes in consumer behavior.
Electrolux also focuses on an agile manufacturing set-up for fast
adaptation to changes in demand. In times of strong market
demand, it is also essential that Electrolux can benefit from its
global scale by delivering new innovative products and out-
standing consumer experiences with a high speed to market.
Electrolux markets are also subject to price competition. This
is particularly evident in the low-cost segments and in product
categories with significant overcapacity. In markets with high
inflation combined with currency rate fluctuations, Electrolux
has a better possibility to carry out price increases to offset
potential negative effects.
Raw material impact
Materials account for a large share of the Group’s costs.
Electrolux purchases raw materials and components for
approximately SEK 43bn, of which approximately SEK 12bn
referred to raw materials in 2020. Fluctuations in commodity
prices impact the Group’s input costs and, therefore, its profit-
ability. In order to mitigate increases in raw material prices,
Electrolux raises prices of its products, improves cost efficiency
and negotiates more favorable purchasing contracts for com-
modities such as steel and chemicals.
Internal risks
Supply chain risks
The availability of many components depends on suppliers.
Their potential interruption or lack of capacity would affect
deliveries. Equally important, suppliers of finished goods might
affect the Group’s financial result and market shares negatively
in case of shortfall in delivery or quality related issues. Another
ELECTROLUX ANNUAL REPORT 2020
30 Board of Directors’ report and financial statements
The historical development of the Electrolux share has been adjusted to take into account the distribution of Electrolux Professional AB to Electrolux shareholders on March 23, 2020.
Share information and ownership
According to Monitor by Modular Finance AB, there were 59,401
shareholders in AB Electrolux as of December 31, 2020. Investor
AB is the largest shareholder, owning 16.4% of the share capital
and 28.4% of the voting rights. Information on the shareholder
structure is updated quarterly at www.electroluxgroup.com
Distribution of shareholdings
Shareholding
1–1,000
1,001–10,000
10,001–20,000
20,001–
Total
Ownership, %
Number of
shareholders
As % of
shareholders
3.5
3.8
0.7
92.0
100
54,247
4,670
152
332
59,401
91.3
7.9
0.3
0.5
100
Source: Monitor by Modular Finance AB. Compiled and processed data from various
sources, including Euroclear, Morningstar and the Swedish Financial Supervisory Authority
( Finansinspektionen) as of December 31, 2020.
Articles of Association
AB Electrolux Articles of Association stipulate that the Annual
General Meeting (AGM) shall always resolve on the appoint-
ment of the members of the Board of Directors. Apart from that,
the articles do not include any provisions for appointing or
dismissing members of the Board of Directors or for changing
the articles.
A shareholder participating in the AGM is entitled to vote for
the full number of shares which he or she owns or represents.
Outstanding shares in the company may be freely transferred,
without restrictions under law or the company’s Articles of
Association. Electrolux is not aware of any agreements between
shareholders, which limit the right to transfer shares.
The full Articles of Association can be downloaded at
www.electroluxgroup.com
Effect of significant changes in ownership structure
on long-term financing
The Group’s long-term financing is subject to conditions, which
stipulate that lenders may request advance repayment in
the event of significant changes in the ownership of the com-
pany. Such significant change could result from a public bid to
acquire Electrolux shares.
Share price performance
The Electrolux share is listed on the exchange Nasdaq
Stockholm. The Electrolux B share increased by 1% in 2020,
underperforming the broader Swedish market index, OMX
Stockholm, which increased by 13% during the same period. The
opening price for the Electrolux B share in 2020 was SEK 189.64.
The highest closing price was SEK 215.30 on November 3, while
the lowest closing price was SEK 105.05 on March 23. The closing
price for the B share at year-end 2020 was SEK 191.35.
Total shareholder return during the year was 4%. Over the
past ten years, the average total return on an investment in
Electrolux B shares has been 6% annually. The corresponding
performance for the OMX Stockholm Return Index was 10%.
Share capital and ownership structure
As of December 31, 2020, the share capital of AB Electrolux
amounted to approximately SEK 1,545m, corresponding to
308,920,308 shares. The share capital of Electrolux consists of
Class A shares and Class B shares. An A share entitles the holder
to one vote and a B share to one-tenth of a vote. All shares enti-
tle the holder to the same proportion of assets and earnings and
carry equal rights in terms of dividends. In accordance with the
Swedish Companies Act, the Art icles of Association of Electrolux
also provide for specific rights of priority for holders of different
types of shares, in the event that the company issues new shares
or certain other instruments.
According to Electrolux Articles of Association, owners of
Class A shares have the right to have such shares converted to
Class B shares. The purpose of the conversion clause is to give
holders of Class A shares an opportunity to achieve improved
liquidity in their shareholdings. Conversion re duces the total
number of votes in the company. There were no conversion
of shares in 2020.
The total number of registered shares in the company
amounts to 308,920,308 shares, of which 8,192,539 are Class A
shares and 300,727,769 are Class B shares, and the total number
of votes amounts to 38,265,316.
Major shareholders
Investor AB
Alecta Pension Insurance
Swedbank Robur Funds
Handelsbanken Funds
BlackRock, Inc.
Nordea Funds
Vanguard
AMF Insurance & Funds
Didner & Gerge Funds
Norges Bank Investment Management
Share
capital, %
Voting
rights, %
16.4
28.4
5.8
4.5
3.7
2.6
2.4
2.1
1.9
1.8
1.7
5.9
3.7
3.0
2.1
2.0
1.7
3.9
1.4
1.4
Total, ten largest shareholders
42.9
53.5
Source: Monitor by Modular Finance AB. Compiled and processed data from various sources,
including Euroclear, Morningstar and the Swedish Financial Supervisory Authority
(Finansinspektionen) as of December 31, 2020.
OWNERSHIP STRUCTURE
Swedish institutions and mutual funds, 60%
Foreign investors, 33%
Swedish private investors, 7%
At year-end, about 33% of the total share capital
was owned by foreign investors.
Source: Monitor by Modular Finance AB.
Compiled and processed data from various
sources, including Euroclear, Morningstar and
the Swedish Financial Supervisory Authority
(Finansinspektionen) as of December 31, 2020.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 31
Distribution of funds to shareholders
Distribution of Electrolux Professional
In March, 2020, Electrolux Professional AB was distributed to
AB Electrolux shareholders and listed on Nasdaq Stockholm.
On February 21, 2020, an Extraordinary General Meeting
(EGM) decided to distribute all the shares in Electrolux
Professional to Electrolux shareholders. Prior to the EGM an
information brochure presenting the background and reasons
for the proposed split of the Electrolux Group as well as a
description of Electrolux Professional’s business was published
on the Group’s website on January 31, 2020.
On March 10, 2020, a prospectus was published on the
Group’s website. Investors, financial analysts and media
representatives were invited to Electrolux Professional’s Investor
Day, held on March 11, 2020.
The last day for trading in shares of Electrolux including the
right to receive shares in Electrolux Professional was March 17,
2020. Electrolux shareholders received shares in Electrolux
Professional in proportion to their existing shareholding in
Electrolux. Each share of series A in Electrolux entitled to one
share of series A in Electrolux Professional and each share of
series B in Electrolux entitled to one share of series B in
Electrolux Professional. Listing and the first day of trading in the
shares of Electrolux Professional on Nasdaq Stockholm was
March 23, 2020.
Dividend 2019
The Board withdrew the dividend proposal ahead of the Annual
General Meeting (AGM) in March 2020 due to the situation
with the coronavirus . However, after assessing the company's
financial postition and the impact of the pandemic, the Board
announced in September its proposal to reinstate a dividend for
the financial year 2019 of SEK 7.00 per share. This was resolved
upon by an Extraordinary General Meeting in November, 2020,
and paid in one installment on November 10, 2020.
Proposed dividend
The Board of Directors proposes a dividend for 2020 of SEK 8.00
(7.00) per share, for a total dividend payment of approximately
SEK 2,299m (2,012). The proposed dividend corresponds to
approximately 58% of income for the period, continuing opera-
tions. Last year's dividend corresponded to approximately 80%
of income for the period, total Group (including discontinued
operations).
The dividend is proposed to be paid in two equal installments,
the first with record date March 29, 2021, and the second with
record date September 29, 2021. The first installment is esti-
mated to be paid on April 1, 2021, and the second installment on
October 4, 2021.
The Group’s policy is for the dividend to correspond to at
least 30% of income for the period. Historically, the Electrolux
dividend rate has been considerably higher than 30%. Electrolux
has a long tradition of a high total distribution to shareholders
that includes repurchases and redemptions of shares.
Proposal for a renewed mandate on acquisition
of own shares
Electrolux has, for several years, had a mandate from the Annual
General Meetings to acquire own shares.
The Board of Directors proposes the Annual General Meeting
2021 to authorize the Board of Directors, for the period until
the next Annual General Meeting, to resolve on acquisitions of
shares in the company and that the company may acquire as
a maximum so many B shares that, following each acquisition,
the company holds a maximum of 10% of all shares issued by the
company.
The purpose of the proposal is to be able to use repurchased
shares on account of potential company acquisitions and the
company’s share related incentive programs, and to be able to
adapt the company’s capital structure.
As of December 31, 2020, Electrolux held 21,522,858 B shares
in Electrolux, corresponding to approximately 7.0% of the total
number of shares in the company.
Number of shares
Number of shares as of January 1, 2020
8,192,539
300,727,769
308,920,308
21,522,858
287,397,450
Total number of shares as of December 31, 2020
8,192,539
300,727,769
308,920,308
21,522,858
287,397,450
As % of total number of shares
7.0%
A shares
B shares
Shares, total
Shares held
by Electrolux
Shares held
by other
shareholders
TOTAL DISTRIBUTION TO SHAREHOLDERS
SEKM
8,000
6,000
4,000
2,000
0
Electrolux has a
long tradition of
high total distribu-
tion to share holders.
In 2020, Electrolux
Professional AB
was distributed to
AB Electrolux share-
holders and listed on
Nasdaq Stockholm.
08
09
10
11
12
13
14
15
16
17
18
19
20
Dividend
Distribution of Electrolux Professional AB
ELECTROLUX ANNUAL REPORT 2020
32 Board of Directors’ report and financial statements
Employees
Electrolux corporate culture
Teamship is the Electrolux way of working. It’s about setting
aligned goals that allow clear choices and continuous improve-
ment. It’s about knowing how to collaborate. It’s about transpar-
ency and a learning organization. Finally, it’s about engage-
ment and passion about outstanding consumer experiences.
Wherever Electrolux operates in the world, the company
applies the same high ethical standards and principles of
conduct.
Electrolux has a global ethics program, encompassing both
ethics training and a whistleblowing system – the Electrolux
Ethics Helpline. Through the Ethics Helpline, employees can
report suspected misconduct in local languages. Reports may
be submitted anonymously if legally permitted.
Code of Conduct
The Group has a Code of Conduct that defines high employ-
ment standards for all Electrolux employees in all countries and
business areas. It incorporates issues such as child and forced
labor, health and safety, workers’ rights and environmental
compliance. Key policies in this context include the Workplace
Policy, the Anti-Corruption Policy and the Environmental Policy.
Number of employees
The average number of employees for Electrolux continuing
operations decreased in 2020 to 47,543 (48,652), of whom 1,414
(1,341) were in Sweden.
Salaries and remuneration in 2020 amounted to SEK 15,666m
(16,318), of which SEK 1,074m (1,339) refers to Sweden.
Remuneration guidelines for Group Management
The following guidelines were approved by the Annual General
Meeting 2020 and apply until the Annual General Meeting 2024
unless any changes are proposed.
The guidelines applies to the remuneration and other terms
of employment for the President and CEO, other members of the
Group Management of Electrolux (’Group Management’) and, if
applicable, remuneration to board members for work in addi-
tion to the board assignment. The Group Management currently
comprises ten executives.
The principles shall be applied to employment and con-
sultancy agreements entered into after the Annual General
Meeting in 2020 and to changes made to existing agreements
thereafter. The guidelines shall be in force until new guidelines
are adopted by the General Meeting. These guidelines do not
apply to any remuneration decided or approved by the General
Meeting.
Remuneration for the President and CEO and, if applicable,
members of the Board of Directors is resolved upon by
AB Electrolux Board of Directors, based on the recommenda-
EMPLOYEES1)
EMPLOYEES
SEKM
60,000
55,000
50,000
45,000
40,000
Average number of employees
Net sales per employee
The average number of employees
decreased to 47,543 (48,652) in 2020.
2.60
2.45
2.30
2.15
2.00
16
17
18
19
20
1) The figures for 2018, 2019 and 2020 are for continuing operations, exclusive of
Electrolux Professional.
tion of the Remuneration Committee. Remuneration for other
members of Group Management is resolved upon by the Remu-
neration Committee and reported to the Board of Directors. The
Remuneration Committee shall also monitor and evaluate pro-
grams for variable remuneration for the Group Management,
the application of the guidelines for executive remuneration as
well as the current remuneration structures and compensation
levels in the Company. The Board of Directors shall, based on the
recommendation from the Remuneration Committee, prepare a
proposal for new guidelines at least every fourth year and sub-
mit it to the Annual General Meeting. The President and CEO and
other members of the Group Management do not participate in
the Board of Directors’ processing of and resolutions regarding
remuneration-related matters in so far as they are affected by
such matters.
Note 27 of the Annual Report includes a detailed description of existing remuneration
arrangements for Group Management, including fixed and variable compensation, long-
term incentive programs and other benefits.
Electrolux has a clear strategy to deliver profitable growth and
create shareholder value. A prerequisite for the successful imple-
mentation of the Company’s business strategy and safeguard-
ing of its long-term interests, including its sustainability, is that the
Company is able to recruit and retain qualified personnel. To this
end, it is necessary that the Company offers competitive remu-
neration in relation to the country or region of employment of
each Group Management member. These guidelines enable the
Company to offer the Group Management a competitive total
remuneration. More information on the Company’s strategy
can be found on the Company’s website and in the most recent
annual report, www.electroluxgroup.com.
The remuneration terms shall emphasize ‘pay for perfor-
mance’, and vary with the performance of the individual and the
Group. The total remuneration for the Group Management shall
be in line with market practice and may comprise of the follow-
ing components: fixed compensation, variable compensation,
pension benefits and other benefits.
Employment contracts governed by rules other than Swed-
ish may be duly adjusted for compliance with mandatory rules
or established local practice, taking into account, to the extent
possible, the overall purpose of these guidelines.
Fixed compensation
The Annual Base Salary (’ABS’) shall be competitive relative to
the relevant country market and reflect the scope of the job
responsibilities. Salary levels shall be reviewed periodically
(usually annually) to ensure continued competitiveness and to
recognize individual performance.
Variable compensation
Variable compensation consists of both short-term and long-
term incentives. Long-term incentives consist of long-term
share-related incentive programs (’LTI programs’). Such pro-
grams are resolved upon by the General Meeting and are
therefore excluded from these guidelines. Each year, the Board
of Directors will evaluate whether or not an LTI program shall
be proposed to the General Meeting. LTI programs shall be
distinctly linked to the business strategy and shall always be
designed with the aim to further enhance the common interest
of participating employees and Electrolux shareholders of a
good long-term development for Electrolux. For more informa-
tion regarding these LTI programs, including the criteria which
the outcome depend on, please see the corporate governance
section on the Group’s website www.electroluxgroup.com.
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 33
Following the ‘pay for performance’ principle, variable compen-
sation shall represent a significant portion of the total compen-
sation opportunity for Group Management. Variable compen-
sation shall always be measured against pre-defined targets
and have a maximum above which no payout shall be made.
Variable compensation shall mainly relate to financial perfor-
mance targets. Non-financial targets may also be used in order
to strengthen the focus on delivering on the Company’s business
strategy and long-term interests, including its sustainability. The
targets shall be specific, clear, measurable and time bound and
be determined by the Board of Directors.
Short Term Incentive (STI)
Members of the Group Management shall participate in an STI
plan under which they may receive variable compensation. The
objectives in the STI plan shall mainly be financial and the mea-
surement period shall be one year. The objectives shall mainly
be set based on financial performance of the Group and, for the
business area heads, of the business area for which the Group
Management member is responsible, such as profit, financial
efficiency and sales. Financial objectives will comprise at least
80% of the weighting. Non-financial objectives may be related to
sustainability, customer satisfaction, quality or company culture.
To which extent the criteria for awarding variable cash
remuneration has been satisfied shall be determined by the
Remuneration Committee when the measurement period has
ended. For financial objectives, the evaluation shall be based on
the annual financial performance in accordance with the most
recent interim report for the fourth quarter made public by the
Company.
The maximum STI entitlements shall be dependent on job
position and may amount to a maximum of 100% of ABS. Reflect-
ing current market conditions, the STI entitlement for Group
Management members employed in the U.S. may amount to a
maximum of 150% of ABS.
Extraordinary arrangements
Additional variable compensation may be approved in
extraordinary circumstances, under the conditions that such
extraordinary arrangement is made for recruitment or retention
purposes, is agreed on an individual basis, does not exceed
three (3) times the ABS and is earned and/or paid out in install-
ments over a minimum period of two (2) years. Such additional
variable remuneration may also be paid on an individual level
for extraordinary performance beyond the individual’s ordinary
tasks and shall in these situations not exceed 30% of the ABS and
be paid in one installment.
Right to reclaim variable remuneration
Terms and conditions for variable remuneration should be
designed to enable the Board, under exceptional financial cir-
cumstances, to limit or cancel payments of variable remunera-
tion provided that such actions are deemed reasonable (malus).
The Board shall also have the possibility, under applicable law
or contractual provisions and subject to the restrictions that may
apply under law or contract, to in whole or in part reclaim vari-
able remuneration paid on incorrect grounds (claw-back).
Pension and benefits
Old age and survivor’s pension, disability benefits and health-
care benefits shall be designed to reflect home country prac-
tices and requirements. When possible, pension plans shall be
ELECTROLUX ANNUAL REPORT 2020
based on defined contribution. In individual cases, depending
on provisions in collective agreements, tax and/or social secu-
rity legislation to which the individual is subject, other schemes
and mechanisms for pension benefits may be approved.
Defined pension contributions shall not exceed 40% of the ABS
unless the entitlement is higher under applicable collective
agreements.
Other benefits, such as company cars and housing, may be
provided on an individual level or to the entire Group Manage-
ment. Costs relating to such benefits may amount to not more
than 20% of the ABS. Members of the Group Management who
are expatriates, may receive additional remuneration and
other benefits to the extent reasonable in light of the special
circumstances associated with the expat arrangement. Such
benefits shall be determined in line with the Group’s Directive on
International Assignments and may for example include reloca-
tion costs, housing, tuition fees, home travel, tax support and tax
equalization.
Notice of termination and severance pay
The notice period shall be twelve months if Electrolux takes the
initiative to terminate the employment and six months if the
Group Management member takes the initiative to terminate
the employment.
In individual cases, contractual severance pay may be
approved in addition to the notice periods. Contractual sever-
ance pay may only be payable upon Electrolux termination of
the employment arrangement or where a Group Management
member gives notice as the result of an important change in the
working situation, because of which he or she can no longer
perform to standard. This may be the case in e.g. the event of a
substantial change in ownership of Electrolux in combination
with a change in reporting line and/or job scope.
Contractual severance pay may for the individual include the
continuation of the ABS for a period of up to twelve months fol-
lowing termination of the employment agreement; no other ben-
efits shall be included. These payments shall be reduced with the
equivalent value of any income that the individual earns during
that period of up to twelve months from other sources of income,
either from employment or from other business activities.
In addition to the above, compensation for any non-compete
undertaking may be awarded. Such compensation shall be
based on the ABS at the time of notice of termination of the
employment, unless otherwise stipulated by mandatory collec-
tive agreement provisions, and be awarded over the period for
which the non-compete clause applies, which should not exceed
twelve months after termination of the employment. The com-
pensation shall be reduced by an amount corresponding to any
income that the person receives from other sources of income,
either from employment or from other business activities.
Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these
remuneration guidelines, salary and employment conditions
for employees of the Company have been taken into account
by including information on the employees’ total income, the
components of the remuneration and increase and growth rate
over time, in the Remuneration Committee’s and the Board of
Directors’ basis of decision when evaluating whether the guide-
lines and the limitations set out herein are reasonable.
34 Board of Directors’ report and financial statements
Remuneration guidelines for Group Management cont.
Consultancy fees
If a member of the Board of Directors (including through a
wholly-owned subsidiary) should carry out services to Electrolux
in addition to the board assignment, specific fees for this can
be paid out (consultancy fees), provided that such services
contribute to the implementation of Electrolux business strategy
and the safeguarding of Electrolux long-term interests, includ-
ing its sustainability. Such consultancy fee may for each member
of the Board of Directors not exceed the annual remuneration
for the board assignment. The fee shall be in line with market
practice.
Deviations from the guidelines
The Board of Directors may temporarily resolve to deviate from
the guidelines, in whole or in part, if in a specific case there is
special cause for the deviation and a deviation is necessary
to serve the Company’s long-term interests, including its sus-
tainability, or to ensure the Company’s financial viability. The
Remuneration Committee’s tasks include preparing the Board
of Directors’ resolutions in remuneration-related matters. This
includes any resolutions to deviate from the guidelines.
Sustainability and environmental facts
Electrolux – a leader in the Household Durables Industry
The Group’s sustainability performance strengthens relations
with investors and Electrolux is recognized as a sustainability
leader in the household durables industry. In 2020, Electrolux
was included in the Dow Jones Sustainability Index (DJSI) World
and Europe indexes and thereby ranks among the top 10% of the
world’s 2,500 largest companies for social and environmental
performance. Additionally, Electrolux has received recognition
from other indexes and organizations, including SAM, OEKOM,
CDP and UN Global Compact Top 100.
Sustainability reporting 2020
The Group’s sustainability framework – For the Better –
comprises of three areas: Better Solutions, Better Company and
Better Living. For more sustainability related information, please
see the section Sustainability Reporting on page 86–94. The
Sustainability Reporting has been prepared in accordance with
disclosure requirements set out in the Swedish Annual Accounts
Act, chapter 6, paragraph 11.
Events after year-end 2020
Mandatory permits and notification in Sweden and elsewhere
Electrolux operates one plant in Sweden, which accounts for
approximately 0.1% of the total value of the Group’s production.
Manufacturing units in other countries adjust their opera-
tions, apply for necessary permits and report to the authori-
ties in accordance with local legislation. The Group follows a
precautionary principle with reference to both acquisitions of
new plants and continuous operations. No significant non-
compliance with applicable environmental legislation was
reported in 2020.
Electrolux products are affected by legislation in various
markets, principally involving energy consumption, producer
responsibility for recycling, and the restriction and manage-
ment of hazardous substances. Electrolux continuously moni-
tors changes in legislation, and both product development
and manufacturing are adjusted to reflect these changes.
February 1. Electrolux Nomination Committee's proposal for election
of board members
In preparation for the Electrolux Annual General Meeting on March
25, Electrolux Nomination Committee has decided to propose
the re-election of all board members except Kai Wärn, who has
declined re-election. Staffan Bohman is proposed to be re-elected
as Chairman of the Board of Directors, and Petra Hedengran, Henrik
Henriksson, Ulla Litzén, Karin Overbeck, Fredrik Person, David Porter
and Jonas Samuelson as Board Members.
For more information, visit www.electroluxgroup.com
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 35
Parent Company income statement
Income statement
sekm
Net sales
Cost of goods sold
Gross operating income
Selling expenses
Administrative expenses
Other operating expenses
Operating income
Financial income
Financial expenses
Financial items, net
Income after financial items
Appropriations
Income before taxes
Taxes
Income for the period
Total comprehensive income for the period
sekm
Income for the period
Other comprehensive income
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
note
4
6
9
9
21
10
2020
40,621
–34,106
6,515
–3,582
–2,096
–382
455
7,248
–1,066
6,182
6,637
–36
6,601
–137
6,464
2020
6,464
–85
–1
0
–86
6,378
2019
40,594
–35,020
5,574
–3,314
–2,276
–487
–503
5,424
–888
4,536
4,033
–682
3,351
6
3,357
2019
3,357
11
0
0
11
3,368
The Parent Company comprises the functions of the Group’s
head office, as well as five companies operating on a commis-
sion basis for AB Electrolux.
Net sales for the Parent Company, AB Electrolux, during
2020 amounted to SEK 40,621m (40,594) of which SEK 33,349m
(33,113) referred to sales to Group companies and SEK 7,272m
(7,481) to external customers. Income after financial items
was SEK 6,637m (4,033), including dividends from subsidiar-
ies amounting to SEK 6,782m (4,396). Income for the period
amounted to SEK 6,464m (3,357).
Income tax related to group contributions is reported in the
income statement. Income tax related to cash flow hedges is
reported in other comprehensive income.
Capital expenditures in tangible and intangible assets
amounted to SEK 935m (658). Liquid funds at the end of the
period amounted to SEK 15,049m, compared to SEK 6,084m at
the start of the year.
Undistributed earnings in the Parent Company at the
end of the period amounted to SEK 19,453m, compared to
SEK 22,894m at the start of the year. Dividend payments to
shareholders for 2019 amounted to SEK 2,012m. Dividend distri-
bution to shareholders of the shares in Electrolux Professional AB
amounted to SEK 7,749m corresponding to the book value of
the shares at the time of the distribution.
For information on the number of employees, salaries and
remuneration, see Note 27. For information on shareholdings
and participations, see Note 29.
ELECTROLUX ANNUAL REPORT 2020
36 Board of Directors’ report and financial statements
Parent Company balance sheet
sekm
ASSETS
Non–current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Financial assets
Total non–current assets
Current assets
Inventories
Receivables from subsidiaries
Trade receivables
Derivatives with subsidiaries
Derivatives
Other receivables
Prepaid expenses and accrued income
Short-term investments
Cash and bank
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital
Statutory reserve
Development reserve
Non–restricted equity
Retained earnings
Income for the period
Total equity
Untaxed reserves
Provisions
Provisions for pensions and similar commitments
Other provisions
Total provisions
Non–current liabilities
Payable to subsidiaries
Bond loans
Other non–current loans
Total non–current liabilities
Current liabilities
Payable to subsidiaries
Accounts payable
Other liabilities
Short–term borrowings
Derivatives with subsidiaries
Derivatives
Accrued expenses and prepaid income
Total current liabilities
Total liabilities and provisions
Total liabilities, provisions and equity
note
December 31, 2020
December 31, 2019
13
12
14
15
17
20
21
22
23
18
18
18
24
1,834
243
545
31,052
33,674
2,502
18,211
1,154
154
135
293
340
—
15,049
37,838
71,512
1,545
3,017
1,162
5,724
12,989
6,464
19,453
25,177
547
440
1,110
1,550
69
13,634
425
14,128
25,415
1,752
489
248
146
259
1,801
30,110
45,788
71,512
1,772
141
579
39,268
41,760
3,038
22,546
552
54
180
310
336
0
6,084
33,100
74,860
1,545
3,017
1,035
5,597
19,537
3,357
22,894
28,491
430
437
1,024
1,461
69
5,803
2,328
8,200
31,005
1,842
453
1,461
27
242
1,248
36,278
45,939
74,860
ELECTROLUX ANNUAL REPORT 2020
Board of Directors’ report and financial statements 37
Parent Company change in equity
sekm
Opening balance, January 1, 2019
Income for the period
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payment
Development reserve
Dividend
Total transactions with equity holders
Closing balance, December 31, 2019
Income for the period
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payment
Development reserve
Dividend
Total transactions with equity holders
Closing balance, December 31, 2020
Restricted equity
Non-restricted equity
Statutory
reserve
Development
reserve
Fair value
reserve
Retained
earnings
Share
capital
1,545
—
—
—
—
—
—
—
—
—
—
3,017
875
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
160
—
160
1,545
3,017
1,035
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
127
—
127
1,545
3,017
1,162
60
—
11
0
0
11
11
—
—
—
—
71
—
–85
–1
0
–86
–86
—
—
—
—
–15
22,018
3,357
—
—
—
—
3,357
51
–160
–2,443
–2,552
22,823
6,464
—
—
—
—
6,464
69
–127
–9,7611)
–9,819
19,468
Total
equity
27,515
3,357
11
0
0
11
3,368
51
—
–2,443
–2,392
28,491
6,464
–85
–1
0
–86
6,378
69
—
–9,761
–9,692
25,177
1) Dividend payment to shareholders SEK 2,012m and distribution of Electrolux Professional AB SEK 7,749m.
ELECTROLUX ANNUAL REPORT 2020
38 Board of Directors’ report and financial statements
Parent Company cash flow statement
sekm
Operations
Income after financial items
Depreciation and amortization
Capital gain/loss included in operating income
Share-based compensation
Group contributions
Taxes paid
Cash flow from operations, excluding change in operating assets and liabilities
Change in operating assets and liabilities
Change in inventories
Change in trade receivables
Change in current intra-group balances
Change in other current assets
Change in other current liabilities and provisions
Cash flow from operating assets and liabilities
Cash flow from operations
Investments
Change in shares and participations
Capital expenditure in intangible assets
Capital expenditure in property, plant and equipment
Other
Cash flow from investments
Total cash flow from operations and investments
Financing
Change in short-term investments
Change in short-term borrowings
Change in intra-group borrowings
New long-term borrowings
Amortization of long-term borrowings
Dividend
Cash flow from financing
Total cash flow
Cash and cash equivalents at beginning of period
Exchange-rate differences referring to cash and cash equivalents
Cash and cash equivalents at end of period
2020
2019
6,637
401
760
69
82
–103
7,846
536
–602
4,619
58
605
5,216
13,062
–40
–575
–360
115
–860
12,202
—
–566
–5,855
9,785
–4,503
–2,012
–3,151
9,051
6,084
–86
15,049
4,033
302
739
51
–694
–121
4,310
–225
620
–1,261
–51
425
–492
3,818
–5,730
–618
–40
1,969
–4,419
–601
0
34
283
3,767
–2,211
–2,443
–570
–1,171
7,244
11
6,084
ELECTROLUX ANNUAL REPORT 2020
Notes
40 Notes
All amounts in SEKm unless otherwise stated
Notes
Contents
Note 1
Accounting principles
Note 2
Financial risk management
Note 3
Segment information
Note 4
Revenue recognition
Note 5
Operating expenses
Note 6
Other operating income and expenses
Note 7
Material profit or loss items in operating income
Note 8
Leases
Note 9
Financial income and financial expenses
Note 10
Taxes
Note 11 Other comprehensive income
Note 12
Property, plant and equipment, owned
Note 13 Goodwill and other intangible assets
Note 14 Other non-current assets
Note 15
Inventories
Note 16 Other current assets
Note 17
Trade receivables
Note 18
Financial instruments
Note 19 Assets pledged for liabilities to credit institutions
57
61
Note 20
Share capital, number of shares and earnings per share 62
Note 21 Untaxed reserves, Parent Company
Note 22
Post-employment benefits
Note 23 Other provisions
Note 24 Other liabilities
Note 25 Contingent assets and liabilities
Note 26 Acquired, divested and discontinued operations
Note 27
Employees and remuneration
Note 28
Fees to auditors
Note 29
Shares and participations
Note 30
Transactions with related parties
Note 31 Definitions
Note 32 Proposed distribution of earnings
Auditor’s report
62
63
67
67
68
69
71
74
74
75
76
77
78
41
43
45
47
48
49
49
50
51
51
52
53
54
55
56
56
56
AB Electrolux (publ), 556009-4178
ELECTROLUX ANNUAL REPORT 2020
Notes 41
All amounts in SEKm unless otherwise stated
Note 1 Accounting principles
This section describes the comprehensive basis of preparation which has
been applied in preparing the financial statements. Accounting principles
for specific accounting areas and individual line items are described in the
related notes. For additional information on accounting principles, please
contact Electrolux Investor Relations.
The following apply to acquisitions and divestments:
• Companies acquired are included in the consolidated income statement
as of the date when Electrolux gains control.
• Companies divested are included in the consolidated income statement
up to and including the date when Electrolux loses control.
Basis of preparation
The consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU). The consolidated financial statements have been
prepared under the historical cost convention, except for financial instru-
ments at fair value (including derivative financial instruments). Some addi-
tional information is disclosed based on the standard RFR 1 issued by the
Swedish Financial Reporting Board and the Swedish Annual Accounts Act.
As required by IAS 1, Electrolux companies apply uniform accounting rules,
irrespective of national legislation, as defined in the Electrolux Accounting
Manual which is fully compliant with IFRS. The policies set out below have
been consistently applied to all years presented with the exception of new
accounting standards where the application follows the rules in each par-
ticular standard. For information on new standards, see the section on new
or amended accounting standards below.
The effects from applying IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations for the accounting of the Electrolux Professional
operations are described in Note 26.
Enumerated amounts presented in tables and statements may not
always agree with the calculated sum of the related line items due to round-
ing differences. The aim is for each line item to agree with its source and
therefore there may be rounding differences affecting the total when add-
ing up the presented line items.
The Parent Company applies the same accounting principles as the
Group, except in the cases specified in the section entitled ‘Parent Company
accounting principles’.
The financial statements were authorized for issue by the Board of Direc-
tors on February 17, 2021. The balance sheets and income statements are
subject to approval by the Annual General Meeting of shareholders on
March 25, 2021.
Principles applied for consolidation
The consolidated financial statements have been prepared by use of the
acquisition method of accounting, whereby the assets and liabilities and
contingent liabilities assumed in a subsidiary on the date of acquisition are
recognized and measured to determine the acquisition value to the Group.
The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the
date of exchange. The consideration transferred includes the fair value of
any asset or liability resulting from a contingent consideration arrange-
ment. Costs directly attributable to the acquisition effort are expensed as
incurred. On an acquisition-by-acquisition basis, the Group recognizes any
non- controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the identifiable
net assets acquired is recorded as goodwill. If the fair value of the acquired
net assets exceeds the cost of the business combination, the identification
and measurement of the acquired assets must be reassessed. Any excess
remaining after that reassessment represents a ‘bargain purchase’ and is
recognized immediately in the statement of comprehensive income.
The consolidated financial statements for the Group include the financial
statements of the Parent Company and its directly and indirectly owned
subsidiaries after:
• elimination of intra-group transactions, balances and unrealized intra-
group profits, and
• carrying values, depreciation and amortization of acquired surplus
values.
Definition of Group companies
The consolidated financial statements include AB Electrolux and all com-
panies over which the Parent Company has control, i.e., the power to direct
the activities; exposure to variable return and the ability to use its power.
When the Group ceases to have control, any retained interest in the entity is
remeasured at its fair value, with the change in carrying amount recognized
in profit or loss.
At year-end 2020, the Group consisted of 133 (187) companies with 184
(264) operating units.
ELECTROLUX ANNUAL REPORT 2020
Associated companies
Associates are all companies over which the Group has significant influ-
ence but not control, generally accompanying a shareholding of between
20 and 50% of the voting rights. Investments in associated companies are
accounted for in accordance with the equity method.
Foreign currency translation
Foreign currency transactions are translated into the functional currency
using the exchange rate prevailing at the date of each transaction.
Monetary assets and liabilities denominated in foreign currencies are
measured at year-end exchange rates and any exchange-rate differ-
ences are included in income for the period, except when deferred in other
comprehensive income for the effective part of qualifying net investment
hedges.
The consolidated financial statements are presented in Swedish krona
(SEK), which is the Parent Company’s functional currency and the Group’s
presentation currency according to IAS 21.
The balance sheets of foreign subsidiaries are translated into SEK at year-
end closing rates. The income statements are translated at the average
rates for the year. Translation differences thus arising are included in other
comprehensive income.
Exchange rates
SEK
Exchange rate
ARS
AUD
BRL
CAD
CHF
CLP
CNY
EUR
GBP
HUF
MXN
RUB
THB
USD
2020
2019
Average
0.1320
6.34
1.81
6.84
9.77
End of
period
0.0973
6.28
1.58
6.41
9.26
Average
0.2010
6.57
2.40
7.10
9.50
End of
period
0.1558
6.53
2.31
7.14
9.60
0.0116
0.0115
0.0133
0.0125
1.33
10.48
11.83
0.0298
0.4317
0.1275
0.2938
9.18
1.25
10.06
11.14
0.0276
0.4126
0.1095
0.2735
8.19
1.37
10.56
12.03
0.0324
0.4878
0.1455
0.3039
9.43
1.34
10.44
12.25
0.0315
0.4951
0.1507
0.3119
9.33
New or amended accounting standards applied in 2020
The following new, amended or improved accounting standards were
applicable from January 1, 2020: IFRS 3 Business Combinations (endorsed
by the EU April 21, 2020); IAS 1 and IAS 8: Definition of material (endorsed
by the EU on November 29, 2019); and IFRS 16 Leases (endorsed by the EU
on October 9, 2020). Amendments to IFRS 9, IAS 39 and IFRS 7 under the
Interest Rate Benchmark Reform (endorsed by the EU on January 15, 2020 )
were early adopted by the Group from 2019.
The new, amended or improved standards did not have any material
impact on Electrolux financial statements.
New or amended accounting standards to be applied after 2020
The following new, amended or improved accounting standards have
been published but are not mandatory for 2020 and have not been early
adopted by Electrolux: IFRS 17 Insurance Contracts; IAS 1 Presentation of
Financial Statements: Classification of Liabilities as Current or Non-current ;
IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37
Provisions, Contingent Liabilities and Contingent Assets; Annual Improve-
ments 2018-2020; IFRS 4 Insurance Contracts – deferral of IFRS9 (endorsed
by the EU on December 15, 2020); Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (endorsed by
the EU on January 13, 2021). These new, amended or improved standards
have not yet been endorsed by the EU unless specifically stated above and
they are not expected to have any material impact on Electrolux financial
statements.
42 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 1
Critical accounting policies and key sources of estimation uncertainty
Use of estimates
Management has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent assets
and liabilities to prepare the financial statements in conformity with IFRS.
Actual results may differ from these estimates under different assumptions or
conditions. Below, Electrolux has summarized the accounting policies that
require more subjective judgement by management in making assumptions
or estimates regarding the effects of matters that are inherently uncertain.
Asset impairment and useful lives
Non-current assets, including goodwill, are evaluated for impairment yearly
or whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impaired asset is written
down to its recoverable amount, being the higher of fair value less costs
of disposal and value in use. Impairment charges are recorded when the
information shows that the carrying amount of an asset is not recoverable.
In many cases, market value is not available and the fair value has been
estimated by using the discounted cash flow method based on expected
future results. Differences in the estimation of expected future results and
the discount rates used may result in different asset valuations. The yearly
impairment testing of goodwill and other intangible assets with indefinite
useful lives, including sensitivity analyses performed, has not indicated any
impairment. See Note 13 for more information.
Property, plant and equipment are depreciated on a straight-line basis
over their estimated useful lives. Useful lives for property, plant and equip-
ment are estimated between 10 and 40 years for buildings, 15 years for
land improvements and between 3 and 15 years for machinery, technical
installations and other equipment. Management regularly reassesses the
useful lives of all significant assets. The carrying amount of property, plant
and equipment at year-end 2020 amounted to SEK 20,452m. The carrying
amount for goodwill at year-end 2020 amounted to SEK 6,369m.
Deferred taxes
In the preparation of the financial statements, Electrolux estimates the
income taxes in each of the tax jurisdictions in which the Group operates
as well as any deferred taxes based on temporary differences. Deferred
tax assets relating mainly to tax loss carry-forwards, energy-tax credits and
temporary differences are recognized in those cases when future taxable
income is expected to permit the recovery of those tax assets. Changes in
assumptions in the projection of future taxable income as well as changes
in tax rates could result in significant differences in the valuation of deferred
taxes. As of December 31, 2020, Electrolux had a net amount of SEK 6,064m
recognized as deferred tax assets in excess of deferred tax liabilities. As
of December 31, 2020, the Group had tax loss carry-forwards and other
deductible temporary differences of SEK 4,305m, which have not been
included in the computation of deferred tax assets.
Current taxes
Electrolux estimates regarding uncertain outcome of tax audits and tax
litigations are based on management’s best estimates and recorded in the
balance sheet. These estimates might differ from the actual outcome and
the timing of the potential effect on Electrolux cash flow is normally not pos-
sible to predict.
In recent years, tax authorities have been focusing on transfer pricing.
Transfer-pricing matters are normally very complex, include high amounts
and it might take several years to reach a conclusion.
Trade receivables and calculation of loss allowance
Receivables are reported net of provision for expected credit losses. The
net value reflects the amounts that are expected to be collected, based on
circumstances known at the balance sheet date. Changes in circumstances
such as higher than expected defaults or changes in the financial situation
of a significant customer could lead to significantly different valuations.
When measuring expected credit loss the Group uses reasonable and
supportable forward looking information, which is based on assumptions
regarding the future movement of different economic drivers and how these
drivers will affect each other. A sensitivity analysis is presented in Note 17.
At year-end 2020, trade receivables, net of provisions for expected credit
losses, amounted to SEK 19,944m. The total provision for expected credit
losses at year-end 2020 was SEK 698m.
Post-employment benefits
Electrolux sponsors a number of defined contribution and defined ben-
efit pension plans for its employees. The pension calculations, referring to
defined benefit plans, are based on actuarial assumptions regarding dis-
count rates, mortality rates, as well as future salary and pension increases.
The calculation of the pension obligation also depends on the discount
rate. Changes in assumptions directly affect the defined benefit obligation,
service cost, interest income and expense. The discount rate used for the
calculation of expenses during 2020 was 1.87% in average, which was the
same rate used to estimate liabilities at the end of 2019. Sensitivities for the
main assumptions are presented in Note 22.
Restructuring
Restructuring charges include required write-downs of assets and other
non-cash items, as well as estimated costs for personnel reductions and
other direct costs related to the termination of the activity. The charges
are calculated based on detailed plans for activities that are expected to
improve the Group’s cost structure and productivity. In general, the out-
come of similar historical events in previous plans are used as a guideline
to minimize these uncertainties. The total provision for restructuring at year-
end 2020 was SEK 1,486m.
Warranties
As is customary in the industry in which Electrolux operates, many of the
products sold are covered by an original warranty, which is included in the
price and which extends for a predetermined period of time. Provisions for
this original warranty are estimated based on historical data regarding
service rates, cost of repairs, etc. As of December 31, 2020, Electrolux had a
provision for warranty commitments amounting to SEK 2,039m.
Disputes
Electrolux is involved in disputes in the ordinary course of business. The
disputes concern, among other things, product liability, alleged defects in
delivery of goods and services, patent rights and other rights and other
issues on rights and obligations in connection with Electrolux operations.
Such disputes may prove costly and time consuming and may disrupt
normal operations. In addition, the outcome of complicated disputes is
difficult to foresee. It cannot be ruled out that a disadvantageous outcome
of a dispute may prove to have a material adverse effect on the Group’s
earnings and financial position.
Parent Company accounting principles
The Parent Company has prepared its Annual Report in compliance with
Swedish Annual Accounts Act (1995:1554) and recommendation RFR 2,
Accounting for Legal Entities of the Swedish Financial Reporting Board.
RFR 2 prescribes that the Parent Company in the Annual Report of a legal
entity shall apply all International Financial Reporting Standards and inter-
pretations approved by the EU as far as this is possible within the framework
of the Annual Accounts Act, taking into account the connection between
accounting and taxation. The recommendation states which exceptions
from IFRS and additions that shall or can be made.
Shares in subsidiaries
Holdings in subsidiaries are recognized in the Parent Company financial
statements according to the cost method of accounting. The value of sub-
sidiaries are tested for impairment when there is an indication of a decline
in the value.
Foreign currency translations
The Annual Report is presented in Swedish krona (SEK), which is the
Parent Company’s accounting currency according to the Swedish Annual
Accounts Act. One of the companies operating on a commission basis for
AB Electrolux has euro as its functional currency. The balance sheet of the
commissioner company has been translated into SEK at year-end rate. The
income statement has been translated at the average rate for the year.
Translation differences thus arising have been included in Other compre-
hensive income.
Anticipated dividends
Dividends from subsidiaries are recognized in the income statement after
decision by the annual general meeting in the respective subsidiary. Anti-
cipated dividends from subsidiaries are recognized in cases where the
Parent Company has exclusive rights to decide on the size of the dividend
and the Parent Company has made a decision on the size of the dividend
before the Parent Company has published its financial reports.
Taxes
The Parent Company’s financial statements recognize untaxed reserves
including deferred tax. The consolidated financial statements, however,
reclassify untaxed reserves to deferred tax liability and equity. Tax on group
contribution is reported in the income statement.
ELECTROLUX ANNUAL REPORT 2020
Notes 43
All amounts in SEKm unless otherwise stated
Appropriations and untaxed reserves
The Parent Company reports additional fiscal depreciation, required by
Swedish tax law, as appropriations in the income statement. In the balance
sheet, these are included in untaxed reserves.
Leases
All lease agreements where the Parent Company is a lessee are reported
in accordance with the exemption in RFR2, i.e. right-of-use assets and lease
liabilities are not reported in the balance sheet. The leasing fee is recog-
nized as an expense on a straight-line basis over the lease period.
Critical judgements and uncertainties
Valuation of shares in subsidiaries is an area involving judgement and/or
uncertainties for the Parent Company, in addition to the applicable critical
accounting policies and key sources of estimation presented for the Group.
Financial statements presentation
The Parent Company presents the income statement and the balance
sheet in compliance with the Swedish Annual Accounts Act (1995:1554) and
recommendation RFR 2.
Cont. Note 1
Group contributions
Group contributions provided or received by the Parent Company are
recognized as appropriations in the income statement. Shareholder con-
tributions provided by the Parent Company are recognized in shares and
participations which are subject to impairment tests as indicated above.
Pensions
The Parent Company reports pensions in the financial statements in accor-
dance with the exemption in RFR2. According to RFR2, IAS 19 shall be
adopted regarding supplementary disclosures when applicable.
Intangible assets
The Parent Company amortizes trademarks in accordance with RFR 2. The
Electrolux trademark in North America is amortized over 40 years using the
straight-line method. All other trademarks are amortized over their useful
lives, estimated to 10 years, using the straight-line method.
Development reserve
The Parent Company’s financial statements recognize a development
reserve in compliance with the Swedish Annual Accounts Act. An amount
equal to the period’s total expenditure of own developed intangible assets
has been transferred from unrestricted equity to the development reserve
within restricted equity.
Note 2 Financial risk management
Financial risk management
The Group is exposed to a number of risks from liquid funds, trade receiv-
ables, customer-financing receivables, payables, borrowings, commodities
and foreign exchange. The risks include:
• Liquidity risk from the Group’s liquidity requirements
• Interest-rate risk on liquid funds and borrowings
• Financing risk in relation to the Group’s capital requirements
• Foreign-exchange risk on commercial flows and net investments in
foreign subsidiaries
• Commodity-price risk affecting the expenditure on raw materials and
components; and
• Credit risk relating to financial and commercial activities
Comparative information regarding risks described and quantified in this
note are for total Group, including discontinued operations, unless other-
wise stated.
The Board of Directors of Electrolux has established several policies for
the Group (hereinafter all policies are referred to as the Financial Policy)
to monitor and manage the financial risks relating to the operations of
the Group.
Group Treasury in Stockholm, supported by three regional treasury
centers located in Asia, North America, and Latin America, provide services
to the business, co-ordinate access to financial markets, monitor and
manage the financial risks through internal risk reports.
The Group seeks to minimize the effects of these risks by using derivatives
to hedge the exposures. The Group’s Financial Policy governs the use of
financial derivatives and provide principles for the management of foreign
exchange risk, interest rate risk, credit risk, the use of financial derivatives
and non-derivative financial instruments, and the investment of excess
liquidity. The internal auditors review on a continuous basis compliance with
policies and exposure limits. Policy compliance is reported on a monthly
basis by Group Treasury to the Board of Directors.
Liquidity risk
Liquidity risk is defined as the risk of the Group not being able to meet its
payment obligations due to lack of liquidity or due to the inability to convert
assets into liquidity without incurring a loss.
Liquid funds as defined by the Group consist of cash and cash equiva-
lents, short-term investments, financial derivative assets, prepaid inter-
est expenses and accrued interest income. Electrolux Financial Policy
stipulates that the level of liquid funds including unutilized committed credit
facilities shall correspond to at least 2.5% of annualized net sales, at year-
end 2020 this level was 40.6% (18.4). In addition, net liquid funds defined
as liquid funds less short-term borrowings shall exceed zero, taking into
account fluctuations arising from acquisitions, divestments, and seasonal
variations. At year-end 2020 the Group had net liquid funds of SEK 18,864m
(7,569), well above target. Liquid funds shall be deposited in bank accounts
or invested in instruments with high liquidity and issued by creditworthy
issuers. See separate section “Credit risk in financial activities” within this
note. The liquidity risk is considered low at the end of 2020 given the size of
liquid funds available.
Interest-rate risk on liquid funds and borrowings
Interest-rate risk refers to the adverse effects of changes in interest rates
on the Group’s income. The main factors determining this risk include the
interest-fixing period.
Interest-rate risk in liquid funds
Liquidity is either deposited in bank accounts or invested in instruments,
normally with maturities between 0 and 3 months. A downward shift in
the yield curves of one percentage point would reduce the Group’s inter-
est income by approximately SEK 194m (113). For more information, see
Note 18.
Interest-rate risk in borrowings
The debt financing of the Group is managed by Group Treasury in order
to ensure efficiency and risk control. Debt is primarily raised at Parent
Company level and transferred to subsidiaries through internal loans or
capital injections. In this process, swap instruments are used to convert
the funds to the required currency. Short-term financing is also undertaken
locally in subsidiaries where there are capital restrictions. The Group’s
borrowings contain no financial covenants that can trigger premature
cancellation of the loans. For more information, see Note 18.
Group Treasury manages the long-term loan portfolio to keep the
average interest-fixing period between 0 and 3 years. Derivatives, such
as interest-rate swap agreements, are used to manage the interest-rate
risk by changing the interest from fixed to floating or vice versa. For those
derivatives Electrolux practice hedge accounting, which have affected
other comprehensive income by SEK –2m (–0) during 2020. On the basis of
2020 long-term interest-bearing borrowings with an average interest fixing
period of 1.6 years (1.5), a one percentage point shift in interest rates would
impact the Group’s interest expenses by approximately SEK +/–78m (69).
This calculation is based on a parallel shift of all yield curves simultaneously
by one percentage point. Electrolux acknowledges that the calculation is
an approximation and does not take into consideration the fact that the
interest rates on different maturities and different currencies might change
differently.
The Group’s exposure to the reform of IBOR-rates is limited. At year-end
2020, the Group had one floating rate loan denominated in USD maturing
after the indicated USD LIBOR cessation date, see Note 18.
Capital structure and credit rating
The Group defines its capital as equity stated in the balance sheet includ-
ing non-controlling interests. On December 31, 2020, the Group’s capital
amounted to SEK 18,709m (22,574). The Group’s objective is to have a capi-
tal structure resulting in an efficient weighted cost of capital and sufficient
ELECTROLUX ANNUAL REPORT 2020
44 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 2
credit worthiness where operating needs and the needs for potential acqui-
sitions are considered.
To achieve and keep an efficient capital structure, the Financial Policy
states that the Group’s long-term ambition is to maintain a long-term rating
within a safe margin from a non-investment grade. In December 2020, S&P
Global Ratings confirmed the Group’s rating as shown in the table below.
Rating
Long-term
debt
Outlook
Short-
term debt
Short-term
debt, Nordic
the Canadian dollar and the Brazilian real. These currencies represent the
majority of the exposures of the Group, but are largely offsetting each other
as different currencies represent net inflows and outflows. A change up
or down by 10% in the value of each currency against the Swedish krona
would affect the Group’s profit and loss for one year by approximately
SEK +/– 580m (420), as a static calculation. The model assumes the distribu-
tion of earnings and costs effective at year-end 2020 and does not include
any dynamic effects, such as changes in competitiveness or consumer
behavior arising from such changes in exchange rates.
S&P Global Ratings
A-
Stable
A–2
K–1
Sensitivity analysis of major currencies
When monitoring the capital structure, the Group uses different key figures,
which are consistent with methodologies used by rating agencies and
banks. The Group manages the capital structure and makes adjustments to
adapt to changes in economic conditions. In order to maintain or adjust the
capital structure, the Electrolux Board of Directors may propose to adjust
dividends paid to shareholders, return capital to shareholders, buy back
own shares, issue new shares, or sell assets to reduce debt.
Financing risk
Financing risk refers to the risk that financing of the Group’s capital require-
ments and refinancing of existing borrowings could become more difficult
or more costly. This risk can be decreased by ensuring that maturity dates
are evenly distributed over time, and that total short-term borrowings do
not exceed liquidity levels. The financial net debt, total borrowings less
liquid funds, excluding seasonal variances, shall be long-term according
to the Financial Policy. The Group’s goals for long-term borrowings include
an even spread of maturities. The average time to maturity shall be at
least 2 years and a maximum of SEK 5,000m of the long-term borrowings
may mature during a 12-month period. In March 2020, to ensure financial
flexibility and to mitigate the potential impact from the coronavirus pan-
demic, the Board of Directors approved a temporary exception from the
long-term borrowing limits. For more information, see Note 18.
Foreign exchange risk
Foreign exchange risk refers to the adverse effects of changes in foreign
exchange-rates on the Group’s income and equity. In order to manage such
effects, the Group hedges these risks within the framework of the Financial
Policy. Electrolux uses external loans denominated in foreign currencies
as well as various derivatives to facilitate internal lending and to manage
the foregn exchange exposure for the Group. The Group’s overall currency
exposure is managed centrally.
Transaction exposure from commercial flows
The Financial Policy stipulates to what extent commercial flows are to be
hedged. Hedging with currency derivatives is, in most cases, applied on
invoiced flows. This means that currency exposures from forecasted flows
should normally be managed by natural hedges, price adjustments and
cost reductions. However, in cases when both price and volume is com-
mitted, Electrolux may hedge also forecasted flows. For those derivatives
Electrolux practice hedge accounting, which has affected other compre-
hensive income by SEK 33m (–9) during 2020.
Group subsidiaries cover their risks in commercial currency flows mainly
through the Group’s treasury centers. Group Treasury thus assumes the
currency risks and covers such risks externally by the use of currency deriva-
tives.
The Group’s geographically widespread production reduces the effects
of changes in exchange-rates. The remaining transaction exposure is
either related to internal sales from producing entities to sales companies
or external exposures from purchasing of components and input material
for the production paid in foreign currency. These external imports are often
priced in U.S. dollar (USD). The global presence of the Group, however, leads
to a significant netting of the transaction exposures. For additional informa-
tion on exposures and hedging, see Note 18.
Translation exposure from consolidation of entities outside Sweden
Changes in exchange-rates also affect the Group’s income in connection
with translation of income statements of foreign subsidiaries into SEK.
Electrolux does not hedge such exposure. The translation exposures arising
from income statements of foreign subsidiaries are included in the sensitivity
analysis mentioned below.
Foreign-exchange sensitivity from transaction and translation exposure
The major net export currencies that Electrolux is exposed to are the U.S.
dollar, the Chinese renminbi and the euro. The major import currencies
that Electrolux is exposed to are the British pound, the Australian dollar,
Risk
Currency
AUD/SEK
BRL/SEK
GBP/SEK
CAD/SEK
CHF/SEK
RUB/SEK
THB/SEK
CNY/SEK
EUR/SEK
USD/SEK
Change
Profit or loss
impact 2020
Profit or loss
impact 2019
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–356
–334
–242
–242
–207
–131
185
199
471
866
–309
–582
–285
–272
–206
–164
178
261
410
1,248
Exposure from net investments (balance sheet exposure)
The net of assets and liabilities in foreign subsidiaries constitute a net
investment in foreign currency, which generates a translation difference
in the consolidation of the Group. This exposure can have an impact on
the Group’s total comprehensive income, and on the capital structure. The
exposure is normally handled by natural hedges including matching assets
with debts in the same currency. In exceptional cases the exposure can be
managed by currency derivatives implemented on Group level and carried
out by the Parent Company. For those derivatives Electrolux practice
hedge accounting, which has affected other comprehensive income by
SEK –104m (–1) during 2020.
A change up or down by 10% in the value of each currency against the
Swedish krona would affect the net investment of the Group by approxi-
mately SEK +/– 2,864m (3,719), as a static calculation at year-end 2020.
There were no outstanding net investment hedges at year-end 2020, why a
similar valuation of outstanding net investment hedges in 2020, would have
an effect on the Group’s equity of approximately SEK +/– 0m (261).
Commodity-price risks
Commodity-price risk is the risk that the cost of direct and indirect materials
could increase as underlying commodity prices rise in global markets. The
Group is exposed to fluctuations in commodity prices through agreements
with suppliers, whereby the price is linked to the raw material price on the
world market. This exposure can be divided into direct commodity expo-
sure, which refers to pure commodity exposures, and indirect commodity
exposure, which is defined as exposure arising from only part of a com-
ponent. Commodity-price risk is mainly managed through contracts with
the suppliers. A change in price up or down by 10% in steel would affect the
Group’s profit or loss with approximately SEK +/– 600m (850) and in plastics
with approximately SEK +/– 350m (650), based on volumes in 2020.
Credit risk
Credit risk in financial activities
Exposure to credit risks arises from the investment of liquid funds, and
derivatives. In order to limit exposure to credit risk, the Group has adopted
a policy of only dealing with creditworthy counterparties. A counterpart list
has been established, which specifies the maximum allowable exposure in
relation to each counterpart. The Group only transacts investments of liquid
funds and derivatives with issuers and counterparts holding a long-term
rating of at least A- credit rating, as these are considered to have low credit
risk for the purpose of impairment assessment. S&P Global Ratings or similar
independent rating agencies supply the credit rating information. Group
Treasury can allow exceptions from this rule, e.g., to enable money deposits
within countries rated below A-, but this represents only a minor part of the
total liquidity in the Group.
The Group strives for master netting agreements (ISDA) with all
counterparts for derivative transactions. Assets and liabilities will only
be netted from a credit risk perspective for counterparts with valid ISDA-
agreements. As a result of these policies and limitations, the credit risk from
external financial activities is not material.
ELECTROLUX ANNUAL REPORT 2020
Notes 45
All amounts in SEKm unless otherwise stated
Credit risk in trade receivables
Electrolux sells to a substantial number of customers in the form of large
retailers, buying groups and independent stores. Sales are made on the
basis of normal delivery and payment terms. The Electrolux Group Credit
Policy Directive defines how credit management is to be performed in the
Electrolux Group to achieve competitive and professionally performed
credit sales, limited bad debts, and improved cash flow and optimized
profit. On a more detailed level, it also provides a minimum level for
customer and creditrisk assessment, clarification of responsibilities and the
framework for credit decisions. The credit-decision process combines the
parameters risk/reward, payment terms and credit protection in order to
obtain as much paid sales as possible. In some markets, Electrolux uses
credit insurance as a mean of protection. For many years, Electrolux has
used the Electrolux Rating Model (ERM) to have a common and objective
approach to credit-risk assessment that enables more standardized and
systematic credit evaluations to minimize inconsistencies in decisions. The
ERM is based on a risk/reward approach and is the basis for the customer
assessment. The Electrolux Rating Model consists of three different parts:
Customer and Market Information; Warning Signals; and a Credit Risk
Rating (CR2). Through CR2 the customers are classified in risk categories.
Credit approvals and other monitoring procedures are also in place to
ensure that follow-up action is taken to recover overdue debts. Further-
more, the Group reviews the recoverable amount of each trade debt and
debt investment on an individual basis at the end of the reporting period to
ensure that adequate loss allowance is made for irrecoverable amounts.
In this regard, management considers that the Group’s credit risk is signifi-
cantly reduced.
Trade receivables relate to a large number of customers, spread across
diverse geographical areas. However, there is a concentration of large
credit exposures on a number of customers in, primarily, the U.S., Latin
America and Europe. Concentration of credit risk related to a single coun-
terparty did not exceed 8.4% (6.4) total trade receivables at any time during
the year. For more information, see Note 17.
The Group defines default as customers where significant financial dif-
ficulties have been identified. A receivable is written off when there are
indications of no realistic prospect of recovery or at a 360 days overdue
whichever is the earliest. There is a limited use of enforcement activities.
Europe
North America
Latin America
Asia-Pacific, Middle East and
Africa
Net sales
Operating income
2020
2019
46,038
45,420
38,219
38,954
16,915
19,653
14,788
14,954
115,960 118,981
2020
3,643
1,215
666
1,038
6,562
2019
2,493
–516
1,821
446
4,244
Group Common costs
—
—
–783
–1,055
Total
Financial items, net
Income after financial items
115,960 118,981
—
—
—
—
5,778
–681
5,096
3,189
–733
2,456
Inter-segment sales exist with the following split:
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Eliminations
2020
2019
1,256
1,270
267
627
1
1
1,205
818
2,729
2,716
Cont. Note 2
Impact from netting agreements on gross exposure from derivatives
Gross
amount
Impact
of netting
agreements
Net
position Change
December 31, 2020
Interest and currency risk
derivatives reported as
assets
Interest and currency risk
derivatives reported as
liabilities
December 31, 2019
Interest and currency risk
derivatives reported as
assets
Interest and currency risk
derivatives reported as
liabilities
135
–111
24
83%
332
–111
221
33%
193
–132
61
68%
293
–132
161
45%
However, since Group Treasury manage a majority of the subsidiary financ-
ing through internal loans from the Parent Company, there is a material
credit risk originating from internal loans. The Parent Company calculates
expected credit losses (ECL) from net lending to its subsidiaries. The model
defines if it is the entity, or the country where the entity is situated, that
accounts for the primary source of credit risk. The credit risk is translated into
a probability of default factor based on S&P Global Ratings historic values.
The net lending exposure is multiplied by the probability of default and a
loss given default to result in the ECL of the subsidiary. The model allows for a
management overlay to adjust the ECL provision, if management possesses
information that qualifies for such an adjustment. Management overlay
takes forward looking factors into consideration.
The opening expected credit loss provision in the Parent Company for
2020 amounted to SEK 86m (72) primarily originating from internal loans
to Latin America. The closing expected credit loss provision in the Parent
Company amounted to SEK 128m (86), mainly due to increased provision
for loans to Argentina. ECL provision for loans made to companes with a
minority shareholding amounted to SEK 9m (0).
To reduce the settlement risk in foreign exchange transactions done with
banks, Group Treasury uses Continuous Linked Settlement (CLS). CLS elimi-
nates temporary settlement risk since both legs of a transaction are settled
simultaneously.
Note 3 Segment information
Reportable segments – Business areas
The Group’s operations are divided into four reportable segments: Europe;
North America; Latin America and Asia-Pacific, Middle East and Africa. The
Professional Products business area was classified as discontinued opera-
tions as of December 5, 2019 and is presented in Note 26.
All the segments are producing appliances for the consumer market, and
products comprise mainly of refrigerators, freezers, cookers, dryers, wash-
ing machines, dishwashers, microwave ovens, vacuum cleaners and other
small appliances.
The segments are regularly reviewed by the President and CEO, the
Group’s chief operating decision maker.
The segments are responsible for the operating results and the net assets
used in their businesses, whereas financial items and taxes, as well as net
debt and equity, are not reported per segment. The operating results and
net assets of the segments are consolidated using the same principles
as for the total Group. Operating costs not included in the segments are
shown under Group Common costs, which mainly are costs related to group
management activities typically required to run the Electrolux Group.
Sales between segments are made on market conditions with arm’s-
length principles.
ELECTROLUX ANNUAL REPORT 2020
46 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 3
The segments are responsible for the management of the operational assets and their performance is measured at the same level, while financing is
managed by Group Treasury at group or country level. Consequently, liquid funds, interest-bearing receivables, interest-bearing liabilities and equity are
not allocated to the business segments.
Assets
December 31
Equity and liabilities
December 31
Net assets
December 31
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Other1)
Continuing operations
Discontinued operations
Liquid funds
Total borrowings
Lease liabilities
Pension assets and liabilities
Equity
Total Group
1) Includes common functions, tax items.
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Other3)
Acquisitions/Divestments
Financial items paid
Taxes paid
Continuing operations
Discontinued operations
Total Group
1) Depreciation related to right-of-use assets: SEK 876m (876).
2) Cash flow from operations and investments.
3) Includes Group functions.
2020
25,796
20,667
11,190
11,414
8,798
77,865
—
20,467
—
—
1,272
—
2019
28,032
22,917
14,064
12,351
9,175
86,540
8,034
11,189
—
—
1,043
—
99,604
106,808
Depreciation and
amortization1)
2020
1,595
1,363
533
738
358
—
—
—
4,587
—
4,587
2019
1,693
1,391
694
751
291
—
—
—
4,821
283
5,104
2020
24,390
14,582
6,663
7,418
4,546
57,599
—
—
2019
26,604
16,421
7,020
6,289
4,033
60,368
3,951
—
15,727
11,856
2,618
4,951
18,709
99,604
3,150
4,909
22,574
106,808
2020
1,406
6,086
4,526
3,996
4,252
2019
1,429
6,496
7,044
6,062
5,142
20,265
26,172
—
—
—
—
—
—
—
Capital expenditure
Cash flow2)
2020
2,155
1,772
665
562
183
—
—
—
5,338
—
5,338
2019
2,399
2,573
956
456
290
—
—
—
6,674
257
6,931
2020
3,551
965
1,577
2,551
–92
–8
–596
–1,132
6,816
—
6,816
—
—
—
—
—
—
—
2019
2,716
–1,795
961
1,035
–638
–27
–656
–1,277
321
431
751
Tangible and intangible fixed assets located in the Group’s country of domi-
cile, Sweden, amounted to SEK 2,164m (2,277). Tangible and non-tangible
fixed assets located in all other countries amounted to SEK 30,488m (33,224).
Individually, material countries in this aspect are Italy with SEK 3,707m
(4,104), USA with SEK 9,164m (10,749) and Poland with SEK 2,508m (2,717),
respectively.
No single customer of the Group represents 10% or more of the external
revenue.
Geographical information
USA
Brazil
Germany
Australia
France
Sweden (country of domicile)
United Kingdom
Canada
Italy
Switzerland
Other
Total
Net sales1)
2020
2019
35,001
35,920
12,133
14,154
6,105
5,461
4,058
4,031
3,708
3,343
3,202
3,192
6,056
4,785
3,995
3,968
3,928
3,227
3,702
2,869
35,726
36,377
115,960 118,981
1) Revenues attributable to countries on the basis of customer location.
ELECTROLUX ANNUAL REPORT 2020
Notes 47
All amounts in SEKm unless otherwise stated
Customer incentives
Customer incentives include promotional activities as e.g. coupons, gift
cards, free products and loyalty/cash points. Customer incentives are
additional performance obligations providing the customer with a mate-
rial right, i.e. the customer is purchasing a product or service in the original
purchase and the right to a free or discounted product or service in the
future. The customer is effectively paying in advance for future products or
services. Revenue is therefore allocated to two performance obligations,
the originally purchased product and the product bought in the future (pay-
ment in advance). A liability is recognized for the rebate until it’s used or
expires unused.
Within Electrolux a common promotional activity is to offer free products
in combination with other sales. When the free products are related to
the Electrolux product range, revenue is allocated to both the ordinary
products sold and the free products.
When the free products are unrelated to the Electrolux product range,
the free products are recognized as marketing/sales cost.
Warranties
The most common warranty for Electrolux is to replace a faulty product
under legal and common practice warranty terms. In those cases warranty
is recognized as a provision. Electrolux also sells extended warranty where
the revenue is recognized during the warranty period, which usually starts
after the legal warranty period. Sometimes warranty offered is including a
service part and if it is difficult to separate the warranty from the service the
two are bundled together and revenue is recognized over the warranty
period.
Sales with a right of return
A right of return is not a separate performance obligation, but it affects the
transaction price for the transferred goods. Returns rights are commonly
granted in the retail and consumer industry.
Regarding a right of return which follows from legislation, statutory
requirements, business practice or is stipulated in the contract with the
customer, revenue is not recognized for goods expected to be returned.
Instead, a liability is recognized for expected refunds to customers. An asset
is also recorded for the expected returned item. The estimated amount of
returned goods in each sale with a right of return, is based on a probability-
weighted approach or most likely outcome, whichever is most predictive.
The estimate is revised on each reporting date.
Principal versus agent
In some countries Electrolux acts as an agent, i.e. Electrolux arranges for
goods or services to be provided by an external supplier to the customer.
Electrolux records as revenue the commission fee earned for facilitating
the transfer of goods or service or the net amount of consideration that the
company retains after paying the other party the consideration received in
exchange for the goods or services to be provided by that party.
Freight charges
In most cases freight is included in the price of the product sold and revenue
is recognized at the same time as for the product.
Consignment stock or sell-through arrangement
For some customers Electrolux keeps the inventory of products in the ware-
house of the customer or in the customer’s outlet. Transfer of control of the
products are done when the customer lifts the product from the warehouse
or when the product is sold to the end consumer. Electrolux recognizes
revenue when the control has been transferred or when there is a legal right
of forcing a sales transaction.
Revenue types and flows
The vast majority of the Group’s revenues of SEK 115,960m (118,981) dur-
ing the year consisted of product sales. Revenue from service activities
amounted to SEK 1,797m (1,954). The Group’s net sales in Sweden amounted
to SEK 4,031m (3,968). Exports from Sweden during the year amounted
to SEK 37,099m (35,419), of which SEK 33,045m (32,488) were to Group
subsidiaries. The major part of the Swedish export comes from one of the
Swedish entities acting as a buying/selling hub for the European business
meaning that most of the European product flows are routed via this entity.
Note 4 Revenue recognition
Revenue recognition
Electrolux manufactures and sells appliances mainly in the whole-
sale market to customers being retailers. Electrolux products include
refrigerators, dishwashers, washing machines, cookers, vacuum cleaners,
air conditioners and small domestic appliances.
Sales are recorded net of value-added tax, specific sales taxes, returns,
and trade discounts. Revenues arise from sales of finished products and
services.
Sale of finished products including spare parts and accessories
Sales of products are revenue recognized at a point in time i.e. when control
of the products has transferred, being when the products are delivered to
the customer. Delivery occurs when the products have been shipped to
the specific location, the risks of obsolescence and loss have been trans-
ferred to the customer, and either the customer has accepted the products
in accordance with the sales contract, the acceptance provisions have
lapsed, or there is objective evidence that all criteria for acceptance have
been satisfied. In practice, transfer of control and thus revenue recognition
normally depends on the contractual incoterm.
Transaction price — Volume discounts
The products are often sold with volume discounts based on aggregate
sales over a specific time period, normally 3–12 months. Revenue from these
sales is recognized based on the price specified in the contract, net of the
estimated volume discounts. Accumulated experience is used to estimate
and provide for the discounts using either the expected value method or
an assessment of the most likely amount. Revenue is only recognized to the
extent that it is highly probable that a significant reversal will not occur. A
contract liability is recognized for expected volume discounts payable to
customers in relation to sales made until the end of the reporting period. The
estimated volume discount is revised at each reporting date.
Receivables, contract assets and contract liabilities
A receivable is recognized when the goods are delivered as this is the point
in time that the consideration is unconditional because only the passage of
time is required before the payment is due. If the consideration is conditional
to additional performance, a contract asset is recorded.
If Electrolux receive prepayments from customer a contract liability is
recorded.
Sale of goods and services combined
When contracts include both goods and services the sales value is split
into the separate performance obligations as applicable and revenue is
recognized when each of the separate performance obligations is satisfied.
In general, types of performance obligations that may occur are products,
spare parts, installation, service and support and education.
Sale of services in a separate contract
Electrolux recognizes revenue from services related to installation of
products, repairs or maintenance service when control is transferred,
being over the time the service is provided. For service contracts covering
a longer period revenue is recognized on a linear basis over the contract
period.
Sale of licenses in a separate contract
Electrolux is licensing trade names to other companies. The license provides
the licensee a right to access intellectual property throughout the license
period and revenue is recognized over time. The most common license type
for Electrolux is sales based royalty where the revenue is recognized when
the sales occur.
Payments to customers
Agreements can be made with customers to compensate for various
services or actions the customer takes. This relates to e.g. agreements
under which Electrolux agrees to compensate the customer for e.g.
marketing activities undertaken by the customer. The main rule is that if the
payment is related to a distinct service or product it shall be accounted for
as a purchase of that service or product. If not it shall be deducted from
the related revenue stream. In practice, if the contract doesn’t include any
requirement of follow up from Electrolux side and/or reporting back from
the customer that the service is performed, the payment shall be accounted
for as a reduction of revenue.
ELECTROLUX ANNUAL REPORT 2020
48 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 4
Disaggregation of revenue
Electrolux manufactures and sells appliances mainly in the wholesale mar-
ket to customers being retailers. Electrolux products include refrigerators,
dishwashers, washing machines, cookers, vacuum cleaners, air condition-
ers and small domestic appliances. Electrolux has four business areas with
focus on the consumer market. Sales of services are not material in relation
to Electrolux total net sales.
Geography and product category are considered important attributes
when disaggregating Electrolux revenue. The business areas, also being the
Group’s segments, are based on geography: Europe, North America, Latin
America and Asia-Pacific, Middle East and Africa. In addition, the table
below presents net sales by product area Taste (cooking appliances), Care
(dish and laundry appliances) and Wellbeing (e.g. cleaning appliances and
small domestic appliances).
Disaggregation of revenue
2020
2019
2020
2019
Group
Parent Company
Product Areas
Taste
Care
Wellbeing
Total
70,593
72,424
20,870
20,958
34,298
34,593
16,591
16,602
11,069
11,964
3,160
3,034
115,960 118,981
40,621
40,594
The table below presents the opening and closing balances of contract liabilities as well as movements during the years.
Contract liabilities
Opening balance, January 1, 2019
Gross increase during the period
Paid to/settled with customer
Revenue recognized during the year
Contracts cancelled during the year
Acquisition/divestment of operations
Other changes to contract balances
Exchange-rate differences
DIscontinued operations
Closing balance, December 31, 2019
Gross increase during the period
Paid to/settled with customer
Revenue recognized during the year
Contracts cancelled during the year
Acquisition/divestment of operations
Other changes to contract balances
Exchange-rate differences
Closing balance, December 31, 2020
Advances from
Customers
Customer bonuses/
incentives
Short-term
Long-term
Contract
liabilities, total
Prepaid income – service & warranty
114
1,274
—
–1,213
–5
—
—
4
–109
65
1,394
—
–1,307
–5
6
3
–17
139
4,656
23,907
–22,747
—
–463
—
–26
152
–54
5,425
19,911
–18,438
—
–444
5
–192
–572
5,696
184
289
—
–227
–4
3
—
7
–35
217
223
—
–204
–9
—
–5
–22
200
139
273
—
–7
–3
—
—
3
–107
298
59
—
–2
–9
—
–6
–21
319
5,093
25,743
–22,747
–1,447
–475
3
–26
166
–305
6,005
21,588
–18,438
–1,513
–467
11
–200
–632
6,354
For the Parent Company contract liabilities amounted to SEK 248m (285).
Note 5 Operating expenses
Cost of goods sold and additional information on costs by nature
Cost of goods sold includes expenses for the following items:
• Finished goods i.e. cost for production and sourced products
• Warranty
• Environmental fees
• Warehousing and transportation
• Exchange-rate changes on payables and receivables and the effects
from currency hedging
Operating expenses
Direct material and components
Sourced products
Depreciation and amortization
Salaries, other renumeration and employer
contribution
Other operating expenses
Total
2020
2019
41,740
16,082
4,587
50,092
14,615
4,821
19,075
28,699
19,756
26,508
110,183
115,792
Operating expenses
Cost of goods sold includes direct material and components amounting
to SEK 41,740m (50,092) and sourced products amounting to SEK 16,082m
(14,615). The depreciation and amortization charge for the year amounted
to SEK 4,587m (4,821). Costs for research and development amounted to
SEK 3,575m (3,462).
Government grants relating to expenses have been deducted in the
related expenses by SEK 267m (82). The increase for the year is mainly
related to measures due to the coronavirus. Government grants related to
assets have been recognized as deferred income in the balance sheet and
will be recognized as income over the useful life of the assets. The remaining
value of these grants, at the end of 2020, amounted to SEK 651m (828).
The Group’s operating income includes net exchange-rate differences in
the amount of SEK –160m (–12). The Group’s Swedish factories accounted
for 0.2% (0.1) of the total value of production.
Selling and administration expenses
Selling expenses include expenses for brand communication, sales driving
communication and costs for sales and marketing staff. Selling expenses
also include the cost for impairment of trade receivables.
Administration expenses include expenses for general management,
controlling, human resources, shared service and IT expenses related to
the named functions. Administration costs related to manufacturing are
included in cost of goods sold.
ELECTROLUX ANNUAL REPORT 2020
Notes 49
All amounts in SEKm unless otherwise stated
Note 6 Other operating income and expenses
Note 7 Material profit or loss items in operating income
Other operating income
2020
2019
2020
2019
Group
Parent Company
Gain on sale of property, plant
and equipment
Pension plan amendment
Recovery of overpaid sales tax
Reversal of restructuring provision
Other
Total
78
—
73
—
148
299
98
98
1,403
150
275
2,024
—
—
—
—
—
—
—
—
—
—
0
0
This note summarizes events and transactions with significant effects, which
are relevant for understanding the financial performance when comparing
income for the current period with previous periods, including items such as:
• Capital gains and losses from divestments of product groups or major
units
• Close-down or significant down-sizing of major units or activities
• Restructuring initiatives with a set of activities aimed at reshaping a major
structure or process
• Significant impairment
• Other major non-recurring costs or income
Group
Parent Company
No material items have been identified in 2020.
Other operating expenses
2020
2019
2020
2019
Loss on sale of property, plant
and equipment
Asbestos litigation
Electrolux Professional separation
project & listing costs
Loss on sale of operations and
shares
Legal expenses
Impairment
Other
Total
—
–20
–68
–142
–22
–190
—
–259
–108
–197
–606
—
–197
—
–371
–968
–7
—
—
—
—
—
—
—
–37
—
–375
–450
—
—
–382
–487
Other operating income and
expenses, net
–307
1,057
–382
–487
Material items in 2019 amount to SEK –1,344m and contain restructuring
measures related to the consolidation of the U.S. cooking production,
closure of a refrigeration production line in Latin America and efficiency
measures and outsourcing projects across business areas and Group
common cost, a legal settlement in the U.S. and recovery of overpaid sales
tax in Brazil.
Material profit or loss items
Restructuring charge
Recovery of overpaid sales tax
Legal settlement U.S.
Total
Effect from material profit or loss items by function
Cost of goods sold
Selling expenses
Administration expenses
Other operating income and expenses
Total
2020
2019
— –2,550
—
—
1,403
–197
— –1,344
2020
2019
— –1,938
—
—
—
–69
–543
1,206
— –1,344
ELECTROLUX ANNUAL REPORT 2020
50 Notes
All amounts in SEKm unless otherwise stated
Note 8 Leases
The major part of the group’s lease arrangements are those under which
the group is a lessee. This applies to a large number of assets such as ware-
houses, office premises, vehicles, and certain office equipment. The group’s
activities as a lessor are limited.
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration. Such an assessment is performed at inception of a contract.
An identified lease agreement is further categorized by the group as either
a short-term lease, a lease of a low-value asset or a standard lease. Short-
term leases are defined as leases with a lease term of 12 months or less.
The group’s definition of low-value assets comprises all personal computers
and laptops, phones, office equipment and furniture and all other assets,
independent of asset class, of a value less than SEK 100k when new. Lease
payments related to short-term leases and leases of low value assets are
recognized as operating expenses on a straight-line basis over the term of
the lease. The group applies the term ‘standard lease’ to all identified leases
which are categorized as neither short-term leases nor leases of a low-value
asset. Thus, a standard lease is a lease agreement for which a right-of-use
asset and a corresponding lease liability are recognized at commencement
of the lease, i.e. when the asset is available for use. The group’s right-of-use
assets and its long-term and short-term lease liabilities are presented as
separate line items in the consolidated statement of financial position.
Assets and liabilities arising from a lease are initially measured on a pres-
ent value basis. The lease liability is determined as the present value of all
future lease payments at the commencement date, discounted using the
Group’s calculated incremental borrowing rate determined by country and
contract duration (12–36 months, 37–72 months and >72 months).
The following lease payments are included in the measurement of a lease
liability:
• fixed payments, less any lease incentives,
• variable lease payments that are based on an index or a rate, initially
measured using the index or rate as at the commencement date,
• amounts expected to be payable under residual value guarantees,
• the exercise price of a purchase option if reasonably certain to exercise
that option, and
• payments of penalties for terminating the lease, if the lease term reflects
the exercise of that option.
Variable lease fees that do not depend on an index or rate (including prop-
erty tax related to leased buildings) are not included in the measure ment of
the lease liability. The related variable payments are charged to the state-
ment of comprehensive income as incurred.
The lease liability is subsequently measured by reducing the carrying
amount to reflect the lease payments made and by increasing the carrying
amount to reflect interest on the lease liability, using the effective interest
method.
A right-of-use asset is measured at cost comprising the amount of the
initial measurement of the lease liability, any lease payments made at or
before the commencement day, less any lease incentives received, and any
initial direct costs, and restoration costs (unless incurred to produce inven-
tories) with the corresponding obligation recognized and measured as a
provision under IAS 37. The right-of-use asset is subsequently measured at
cost less accumulated depreciation, any impairment losses as well as any
remeasurement of the lease liability. Impairment of right-of-use assets is
determined and accounted for in accordance with IAS 36.
A remeasurement of the lease liability, and a corresponding applicable
adjustment to the related right-of-use asset, is performed when:
• the lease term has changed or there is a change in the assessment of exer-
cise of a purchase option, in which case the lease liability is remeasured
by discounting the revised lease payments using a revised discount rate,
• the lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in
which cases the lease liability is remeasured by discounting the revised
lease payments using the initial discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which case a
revised discount rate is used), or
• a lease contract is modified and the lease modification is not accounted
for as a separate lease, in which case the lease liability is remeasured
by discounting the revised lease payments using a revised discount rate.
A right-of-use asset is normally depreciated on a straight-line basis over the
shorter of the asset’s useful life and the lease term. However, if ownership of
the asset is reasonably certain to be transferred at the end of the lease, the
right-of-use asset is depreciated over its useful life. Depreciation of a right-
of-use asset starts at the commencement date of the lease.
A lease payment related to a standard lease is accounted for partly as
amortization of the lease liability and partly as interest expense in the state-
ment of comprehensive income.
Lease components are separated from non-lease components for leases
regarding buildings (offices, warehouses etc.). For leases regarding other
asset classes (machinery, vehicles etc.) the lease components and any
associated non-lease components are accounted for as a single arrange-
ment.
In determining the lease term, extension options are only included if it is
determined as reasonably certain to extend, being subject to continuous
re-assessment. Periods after termination options are only included in the
lease term if the lease is reasonably certain not to be terminated. A lease
term is reviewed if a significant event or a significant change in circum-
stances occurs which affects the assessment.
Lease income and expenses
Income from subleasing
Lease expenses:
Short-term leases
Leases of low-value assets
Variable lease payments
Depreciation of right-of-use assets
Group
2020
6
–13
–49
–189
–876
20191)
5
–56
–55
–173
–876
Total lease expenses in operating income
–1,127
–1,159
Lease liability interest expense
–108
–124
1) 2019 adjusted due to discontinued operations.
Total cash outflow for lease contracts amounts to SEK 1,270m (1,278)
for the year. The calculated average lease interest rate for the year was
3.7% (3.8). Lease commitments related to leases not yet commenced per
December 31 amount to SEK 36m (111).
Maturity profile of lease liabilities is presented in Note 18.
For the Parent Company, lease expenses for the year amounted to
SEK 118m (116) and future lease payment obligations at year end amount
to SEK 502m (539). The most relevant lease agreement for the Parent
company is the office rental agreement regarding Electrolux headquarters
in Stockholm.
ELECTROLUX ANNUAL REPORT 2020
Cont. Note 8
Property, plant and equipment, right-of-use
Group
Carrying amount
Opening balance, January 1, 2019
Acquisition of operations
Additions
Cancellations
Depreciation
Exchange rate differences
Discontinued operations
Closing balance, December 31, 2019
Acquisition of operations
Additions
Cancellations
Depreciation
Exchange rate differences
Closing balance, December 31, 2020
Notes 51
All amounts in SEKm unless otherwise stated
Land
Buildings
Machinery
Other equipment
6
—
0
0
–1
0
–0
5
—
4
—
–1
–1
7
2,571
29
589
–126
–678
86
–182
2,289
12
384
8
–622
–208
1,864
41
—
42
–7
–22
1
–12
42
—
15
0
–15
–2
40
511
2
254
–11
–253
15
–43
476
—
246
–7
–238
–36
440
Total
3,128
30
885
–144
–953
102
–238
2,811
12
649
0
–876
–246
2,351
Note 9 Financial income and financial expenses
Note 10 Taxes
Financial income
Interest income
from subsidiaries
from others
Dividends from subsidiaries
Other financial income
Total
Financial expenses
Interest expenses
to subsidiaries
to others
Lease liability interest expenses
Pension interest expenses, net
Exchange-rate differences, net
Other financial expenses
Total
Financial items, net
Group
Parent Company
2020
2019
2020
2019
—
74
—
—
74
—
–363
–108
–41
–70
–173
–755
–681
—
69
—
—
69
442
1,013
3
0
6,782
4,396
21
15
7,248
5,424
—
–367
–124
–41
–72
–198
–802
–733
–96
–313
–307
–251
—
—
–472
–185
–1,066
—
—
–151
–179
–888
6,182
4,536
Interest expenses to others, for the Group and Parent Company, include
gains and losses on derivatives used for managing the Group’s interest
fixing. For information on financial instruments, see Note 18. For more
information on post-employment benefits, see Note 22.
Current taxes
Deferred taxes
Taxes in income for the period,
continuing operations
Taxes in income for the period,
discontinued operations
Taxes related to OCI
Taxes included in total
comprehensive income
Group
Parent Company
2020
2019
2020
–1,283 –1,017
175
382
–1,108
–636
—
2
–314
27
0
–22
–22
—
0
–1,106
–923
–22
2019
–121
127
6
—
—
6
Deferred taxes 2020 include an effect of SEK –11m (–11) due to changes
in tax rates. The consolidated accounts include deferred tax liabilities of
SEK 113m (89) related to untaxed reserves in the Parent Company.
Theoretical and actual tax rates
Group
Parent Company
%
Theoretical tax rate
Non-taxable/non-deductible
income statement items, net
Non-recognized tax losses carried
forward
Utilized non-recognized tax losses
carried forward
Other changes in recognition of
deferred tax
Withholding tax
Other
Actual tax rate
2020
24.7
2019
31.1
2020
21.4
2019
21.4
–0.8
2.2
–20.5
–23.5
1.1
0.9
–1.6
–0.9
–4.3
1.9
0.7
21.7
–7.0
5.3
–5.7
25.9
—
—
0.1
1.6
–0.4
2.1
—
—
0.3
2.0
–0,5
–0.2
The theoretical tax rate for the Group is calculated on the basis of the
weighted total income after financial items per country, multiplied by the
local statutory tax rates.
Non-taxable/non-deductible items in the Parent Company are mainly
related to dividends from subsidiaries.
Non-recognized deductible temporary differences
As of December 31, 2020, the Group had tax loss carry-forwards and other
deductible temporary differences of SEK 4,305m (4,971), which have not
been included in computation of deferred tax assets. The decision not to
recognize certain temporary differences is based on an assessment where
the likelihood of future utilization is evaluated for each of the temporary
items. The Group typically does not recognize temporary differences in
situations where it is considered the ability to utilize these to be limited.
ELECTROLUX ANNUAL REPORT 2020
52 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 10
The non-recognized deductible temporary differences will expire as follows:
Note 11 Other comprehensive income
Items that will not be reclassified to income
for the period:
Remeasurement of provisions for post-employment
benefits
Opening balance, January 1
Gain/loss taken to other comprehensive income
Income tax relating to items that will not be reclassified
Closing balance, December 31
Items that may be reclassified subsequently to income
for the period:
Group
2020
2019
29
189
–46
172
129
–103
3
29
Cash flow hedges
Opening balance, January 1
Gain/loss taken to other comprehensive income
Transferred to profit and loss on sale
Closing balance, December 31
–18
–1
33
14
–8
–14
4
–18
Exchange differences on translation of
foreign operations
Opening balance, January 1
Net investment hedge
Translation differences
Transferred to profit and loss, discontinued operations
Closing balance, December 31
–104
–3,150
–72
–1,261 –2,291
–1
1,030
—
–4,588 –1,261
Income tax relating to items that may be reclassified
Opening balance, January 1
Cash flow hedges
Net investment hedges
Closing balance, December 31
Non-controlling interests, translation differences
–68
–7
55
–19
0
Other comprehensive income, net of tax
–3,102
–91
2
22
–68
0
944
Income taxes affecting other comprehensive income during the year
amounted to a total of SEK 2m (26) of which SEK –46m (3) related to
remeasurement of provisions for post-employment benefits and SEK 48m
(24) related to financial instruments for hedging.
Non-recognized temporary differences
2020
2021
2022
2023
2024
2025
And thereafter
Without time limit
Total
December 31
2020
n/a
26
31
34
90
56
813
3,255
4,305
2019
56
61
31
12
120
n/a
254
4,438
4,971
The tables below show deferred tax assets and liabilities at the end of each
reporting period and the change in net deferred tax assets and liabilities.
Deferred tax assets and deferred tax liabilities
Deferred tax assets:
Property, plant and equipment
Provision for Pension obligations
Provision for restructuring
Other provisions
Inventories
Accrued expenses and prepaid income
Unused tax losses carried forward
Tax credits
Other deferred tax assets
Deferred tax assets before netting of deferred tax
assets and liabilities
Netting of deferred tax assets and liabilities
Deferred tax assets, net
Deferred tax liabilities:
Property, plant and equipment
Other provisions
Inventories
Other taxable temporary differences
Deferred tax liabilities before netting of deferred tax
assets and liabilities
Netting of deferred tax assets and liabilities
Deferred tax liabilities, net
2020
2019
333
913
270
780
95
452
521
2,760
1,431
340
861
308
734
94
587
1,148
2,512
1,556
8,140
7,554
–1,490 –1,522
6,618
6,064
949
84
250
684
890
78
327
676
1,971
1,967
–1,490 –1,410
561
476
Deferred tax assets and liabilities, net
5,588
6,057
Deferred tax assets and liabilities, net opening
balance before restatement due to change in
accounting principles
Restatement of opening balance due to change in
accounting principles
Deferred tax assets and liabilities, net opening
balance
Recognized in income statement, continuing
operations
Recognized in income statement, discontinued
operations
Recognized in other comprehensive income
Acquisitions of operations
Exchange rate differences
Discontinued operations
2020
2019
6,057
5,580
—
90
6,057
5,670
175
382
—
–25
35
–654
100
3
–14
122
—
–206
Deferred tax assets and liabilities, net closing balance
5,588
6,057
As per December 31, the Parent Company reported deferred tax assets
amounting to SEK 545m (579) which mainly relate to unused tax losses
carried forward, pensions and restructuring provisions.
ELECTROLUX ANNUAL REPORT 2020
Notes 53
All amounts in SEKm unless otherwise stated
Note 12 Property, plant and equipment, owned
Property, plant, and equipment are stated at historical cost less straight-line
accumulated depreciation, adjusted for any impairment charges. Land is
not depreciated as it is considered to have an unlimited useful life. All other
depreciation is calculated using the straight-line method and is based on
the following estimated useful lives:
• Land
• Land improvements
• Buildings
• Machinery and technical installations
• Other equipment
No depreciation
0–15 years
10–40 years
3–15 years
3–10 years
Group
Acquisition costs
Opening balance, January 1, 2019
Acquired during the year
Acquisition of operations
Transfers and reclassifications
Sales, scrapping, etc.
Exchange–rate differences
Discontinued operations
Closing balance, December 31, 2019
Acquired during the year
Acquisition of operations
Transfers and reclassifications
Sales, scrapping, etc.
Exchange-rate differences
Closing balance, December 31, 2020
Accumulated depreciation
Opening balance, January 1, 2019
Depreciation for the year
Transfers and reclassifications
Sales, scrapping, etc.
Impairment
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Depreciation for the year
Transfers and reclassifications
Sales, scrapping, etc.
Impairment
Exchange-rate differences
Closing balance, December 31, 2020
Net carrying amount, December 31, 2019
Net carrying amount, December 31, 2020
Land and land
improvements
Buildings
Machinery
and technical
installations
Other
equipment
Plants under
construction
and advances
Total
1,532
59
3
37
–40
58
–142
1,506
1
—
43
–71
–146
1,334
303
29
11
–39
4
10
–11
307
27
0
–12
—
–37
284
1,200
1,050
11,114
208
3
136
–318
385
–844
10,683
217
8
887
–102
–1,279
10,414
5,325
366
–11
–285
278
168
–337
5,504
360
82
–93
–2
–594
5,257
5,179
5,158
41,156
1,250
6
2,331
–2,143
1,076
–1,903
41,774
963
0
1,999
–1,867
–4,894
37,974
32,032
2,579
–24
–2,019
557
799
–1,516
32,409
2,213
–69
–1,760
–51
–3,643
29,098
9,365
8,876
3,161
255
2
99
–432
78
–235
2,927
184
0
160
–213
–261
2,797
2,536
297
18
–242
–152
58
–179
2,336
287
–13
–200
—
–200
2,210
591
587
4,752
3,789
0
–2,605
–82
127
–134
5,847
2,959
—
–3,001
–7
–679
5,119
431
0
4
0
–74
19
–1
379
0
0
1
3
–45
338
5,468
4,781
61,715
5,562
13
–3
–3,016
1,724
–3,258
62,737
4,325
9
88
–2,260
–7,259
57,639
40,627
3,271
–2
–2,585
613
1,054
–2,044
40,935
2,886
0
–2,064
–50
–4,520
37,187
21,803
20,452
Total net impairment in 2020 was SEK –2m (282) on buildings and land, and SEK –51m (405) on machinery and other equipment and SEK 3m (–74) on plants
under construction. The majority of the impairment relates to the business areas Europe, North America and Latin America.
Parent Company
Acquisition costs
Opening balance, January 1, 2019
Acquired during the year
Transfer of work in progress and advances
Sales, scrapping, discontinued operations etc.
Exchange-rate differences
Closing balance, December 31, 2019
Acquired during the year
Transfer of work in progress and advances
Sales, scrapping, etc.
Exchange-rate differences
Closing balance, December 31, 2020
Accumulated depreciation
Opening balance, January 1, 2019
Depreciation for the year
Sales, scrapping, discontinued operations etc.
Exchange-rate differences
Closing balance, December 31, 2019
Depreciation for the year
Sales, scrapping, etc.
Exchange-rate differences
Closing balance, December 31, 2020
Net carrying amount, December 31, 2019
Net carrying amount, December 31, 2020
ELECTROLUX ANNUAL REPORT 2020
Land and land
improvements
Buildings
Machinery
and technical
installations
Other
equipment
Plants under
construction
and advances
1
—
—
—
—
1
—
—
—
—
1
1
—
—
—
1
—
—
—
1
0
0
1
—
—
—
—
1
—
—
—
—
1
1
—
—
—
1
—
—
—
1
0
0
68
0
9
—
1
78
297
28
–187
–3
213
63
5
—
1
69
38
–5
–3
99
9
114
462
5
14
–43
1
439
15
33
–4
–3
480
354
27
–37
1
345
30
0
–2
373
94
107
31
35
–23
–5
0
38
48
–61
–2
–1
22
0
—
—
—
0
—
—
—
0
38
22
Total
563
40
0
–48
2
557
360
0
–193
–7
717
419
32
–37
2
416
68
–5
–5
474
141
243
54 Notes
All amounts in SEKm unless otherwise stated
Note 13 Goodwill and other intangible assets
Goodwill
Goodwill is reported as an indefinite life intangible asset at cost less
accumulated impairment losses.
Product development
Electrolux capitalizes expenses for certain own development of new
products provided that the level of certainty of their future economic
benefits and useful life is high. The intangible asset is only recognized if the
product is sellable on existing markets and that resources exist to complete
the development. Only expenditures which are directly attributable to the
new product’s development are recognized. Capitalized development
costs are amortized over their useful lives, between 3 and 5 years, using the
straight-line method.
Software
Acquired software licenses and development expenses are capitalized on
the basis of the costs incurred to acquire and bring to use the specific soft-
ware. These costs are amortized over useful lives, between 3 and 5 years,
using the straight-line method.
Trademarks
Trademarks are reported at historical cost less amortization and impair-
ment. The Electrolux trademark in North America, acquired in 2000, is
regarded as an indefinite life intangible asset and is not amortized in the
group accounts. One of the Group’s key strategies is to develop Electrolux
into the leading global brand within the Group’s product categories. This
acquisition gave Electrolux the right to use the Electrolux brand worldwide,
whereas it previously could be used only outside of North America. The total
carrying amount for the Electrolux brand is SEK 410m, included in the item
Other in the table on the next page. All other trademarks are amortized over
their useful lives, estimated to 5 to 10 years, using the straight-line method.
Customer relationships
Customer relationships are recognized at fair value in connection with
acquisitions. The values of these relationships are amortized over their esti-
mated useful lives, between 5 and 15 years, using the straight-line method.
Intangible assets with indefinite useful lives
Goodwill as at December 31, 2020, had a total carrying value of SEK 6,369m.
The allocation, for impairment-testing purposes, on cash-generating units
is shown in the table below.
All intangible assets with indefinite useful lives are tested for impairment
at least once every year. Single assets are tested more often in case there
are indications of impairment. The recoverable amounts of the cash-
generating units have been determined based on value in use calcula-
tions. The cash-generating units equal the business areas. Costs related
Goodwill, value of trademark and discount rate
to group services and global leverage activities are carried by the cash-
generating units and therefore included in the impairment testing of each
cash- generating unit. Common group costs that cannot be allocated on a
reasonable and consistent basis to any of the individual cash-generating
units are included in impairment testing in the total carrying amount of all
cash-generating units combined.
Value in use is calculated using the discounted cash flow model based
on by Group management approved forecasts for the coming four years.
The forecasts are built up from the estimate of the units within each business
area. The preparation of the forecast requires a number of key assumptions
such as volume, price, product mix, prices for raw material and compo-
nents, which will create a basis for future sales growth and gross margin.
These figures are set in relation to historic figures and external reports on
market development. The cash flow for the last year of the four-year period
is used as the base for the perpetuity calculation. The discount rates are
based on the pre-tax Electrolux Group WACC (Weighted Average Cost of
Capital) with adjustments for country specific risk premiums and inflation
rates for each individual country. The individual country discount rates
are used to calculate a weighted average discount rate for each cash-
generating unit.
The pre-tax discount rates used in 2020 were within a range of 9.5% (8.9)
to 14.8% (14.0). For the calculation of the in-perpetuity value, Gordon’s
growth model is used. According to Gordon’s model, the terminal value of a
growing cash flow is calculated as the starting cash flow divided by cost of
capital less the growth rate. Cost of capital less growth of 2% (2%) is within
the range of 7.5 to 12.8%.
Sensitivity analyses have been carried out based on a reduction of the
operating margin by 0.5 percentage points and by an increase in the cost
of capital by one percentage point respectively. None of the sensitivity
analyses led to a reduction of the recoverable amount below the carrying
amount for any of the cash-generating units, i.e. the hypothetical changes
in key assumptions would not lead to any impairment. The calculations
are based on management’s assessment of reasonably possible adverse
changes in operating margin and cost of capital, yet they are hypothetical
and should not be viewed as an indication that these factors are likely
to change. The sensitivity analyses should therefore be interpreted with
caution.
As from 2019, right-of-use assets are included in the carrying amount
of each cash-generating unit. Accordingly, lease payments, representing
lease liability amortization and interest expense, are not considered in
the forecasted cash flows. However, the forecasted cash flows have been
charged with a ‘replacement capital expenditure’ for right-of-use assets,
calculated based on an assumed normalized level of depreciation per
cash-generating unit and a calculated average remaining lease period of
contracts existing at December 31.
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Total
2020
2019
Goodwill
Electrolux
trademark
Discount
rate, %
Goodwill
Electrolux
trademark
Discount
rate, %
434
1,458
978
3,499
6,369
—
410
—
—
410
9.5
9.7
14.8
11.3
449
1,662
1,093
3,867
7,071
—
410
—
—
410
9.1
8.9
14.0
10.8
ELECTROLUX ANNUAL REPORT 2020
Cont. Note 13
Goodwill and other intangible assets
Acquisition costs
Opening balance, January 1, 2019
Acquired during the year
Acquisition of operations
Internally developed
Reclassification
Fully amortized
Sales, scrapping etc.
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Acquired during the year
Acquisition of operations
Internally developed
Reclassification
Fully amortized
Sales, scrapping etc.
Exchange-rate differences
Closing balance, December 31, 2020
Accumulated amortization
Opening balance, January 1, 2019
Amortization for the year
Reclassification
Fully amortized
Impairment
Sales, scrapping etc.
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Amortization for the year
Reclassification
Fully amortized
Impairment
Sales, scrapping etc.
Exchange-rate differences
Closing balance, December 31, 2020
Carrying amount, December 31, 2019
Carrying amount, December 31, 2020
Notes 55
All amounts in SEKm unless otherwise stated
Group
Other intangible assets
Parent
Company
Product
develop-
ment
Goodwill
Software
Other
Total other
intangible
assets
Trademarks,
software, etc.
8,239
—
3841)
—
—
—
—
269
–1,821
7,071
—
13
—
—
—
—
–715
6,369
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,071
6,369
3,574
3,418
2,734
9,726
3,810
—
—
797
–2
–103
–138
75
–107
4,096
—
—
563
–40
–1,719
–62
–395
2,443
2,548
392
—
–103
56
–61
46
–60
2,818
339
–6
–1,719
—
–58
–225
1,149
1,278
1,294
363
—
208
5
–308
–248
47
–10
3,475
177
—
272
–48
–743
–130
–255
2,748
2,118
248
2
–308
1
–69
25
–5
2,012
319
6
–743
–1
–61
–123
1,409
1,463
1,339
—
35
—
—
—
—
37
–454
2,352
1
—
—
—
–7
—
–179
2,167
1,141
240
—
—
13
—
—
–118
1,276
167
—
–7
—
—
–116
1,320
1,076
847
363
35
1,005
3
–411
–386
159
–571
9,923
178
—
835
–88
–2,469
–192
–829
7,358
5,807
880
2
–411
70
–130
71
–183
6,106
825
0
–2,469
–1
–119
–464
3,878
3,817
3,480
140
—
538
—
–216
–545
19
—
3,746
—
—
575
—
–604
–194
–51
3,472
2,096
270
—
–216
—
–182
6
—
1,974
333
—
–604
—
–41
–24
1,638
1,772
1,834
1) Including adjustments of provisional values within the measurement period related to acquisitions with a value of SEK 8m for 2019.
Included in the item Other are trademarks of SEK 610m (690) and customer relationships etc. amounting to SEK 237m (386). Amortization of intangible assets
is included within Cost of goods sold with SEK 330m (454), Administrative expenses with SEK 272m (123) and Selling expenses with SEK 223m (237) in the
income statement. For discontinued operations amortization of intangible assets is included with SEK 0m (66) in the income statement. Electrolux did not
capitalize any borrowing costs during 2020 or 2019.
Note 14 Other non-current assets
Group
December 31
Parent Company
December 31
2020
2019
2020
2019
—
—
—
—
—
—
878
878
1,486
1,486
29,401 37,515
256
241
1,367
1,480
28
32
31,052 39,268
Shares in subsidiaries
Participations in other companies
Long-term receivables in
subsidiaries
Other receivables
Total
ELECTROLUX ANNUAL REPORT 2020
For Group, ‘Other receivables’ include mainly recoverable import duties
and long-term operational tax credits.
See Note 29 for information on the major subsidiaries held by the Par-
ent Company. A detailed specification of the Parent Company’s shares in
subsidiaries has been submitted to the Swedish Companies Registration
Office and is available upon request from AB Electrolux Investor relations.
Write-downs due to obsolescence amounted to SEK 60m (303) for the
Provision, January 1
56 Notes
All amounts in SEKm unless otherwise stated
Note 15 Inventories
Raw materials
Products in progress
Finished products
Advances to suppliers
Total
Group
December 31
Parent Company
December 31
2020
2019
2020
2019
2,894
3,032
299
289
—
—
—
—
9,994 12,854
2,502
3,038
26
19
—
—
13,213 16,194
2,502
3,038
Inventories and work in progress are valued at the lower of cost, at normal
capacity utilization, and net realizable value. Net realizable value is defined
as the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make
the sale at market value. The cost of finished goods and work in progress
comprises development costs, raw materials, direct labor, tooling costs,
other direct costs and related production overheads. The cost of invento-
ries is assigned by using the weighted average cost formula. Provisions for
obsolescence are included in the value for inventory.
The cost of inventories recognized as expense and included in Cost
of goods sold amounted to SEK 79,156m (87,649) for the Group and SEK
34,106m (35,020m) for the Parent Company.
Group and SEK 0m (48m) for the Parent Company.
Reversals of previous write-downs, due to inventories either scrapped or
sold, amounted to SEK 161m (200) for the Group and SEK 47m (0m) for the
Parent Company.
The amounts have been included in the item Cost of goods sold in the
income statements.
Note 16 Other current assets
VAT receivable
Other tax recoverable
Miscellaneous short-term receivables
Provisions for doubtful accounts
Prepaid expenses and accrued income
Prepaid interest expenses and accrued
interest income
Group
December 31
2020
950
198
2019
1,012
946
1,776
1,530
–85
989
–97
1,057
18
17
Note 17 Trade receivables
Group
Parent Company
2020
2019
2020
2019
Trade receivables
20,642 21,729
1,171
Provision for expected credit losses
–698
–882
–17
Trade receivables, net
19,944 20,847
1,154
574
–22
552
income statement within selling expenses. The expected loss calculation is
based on historical data and is adjusted through a management overlay
which considers forward looking analysis, including macroeconomic fac-
tors impacting the different customer segments and more specific factors
such as signs of bankruptcy, officially known insolvency etc. Electrolux uses
credit insurance as a mean of protection. The Group’s internal guidelines to
the companies is to at least reserve 0.01 % for current trade receivables and
for receivables maximum 15 days past due. For trade receivables past due
between 16 to 60 days Electrolux reserves 1% and increase to 5% for receiv-
ables past due between 61 to 180 days. Trade receivables that are 6 months
past due but less than 12 months is reserved at 45% and receivables that are
12 months past due and more are reserved at 100%. The percentages for
ECL are under continuous reassessment. There is no significant impact on
provisions from changes in the forward looking factors.
If the expected credit loss rates on trade receivables between 16 and 60
days past due had been 10% higher/lower as of December 2020, the loss allow-
ance on trade receivables would have increased/decreased SEK 2.3m (0.9). If
the expected credit loss rates on trade receivables between 61 and 180 days
past due had been 10% higher/lower as of December 2020, the loss allowance
on trade receivables would have increased/decreased SEK 4.1m (3.9).
Provision for accounts receivable
Acquisition of operations
New/released provisions
Receivables written off against
provision
Exchange-rate differences and
other changes
Discontinued operations
Provision, December 31
Group
Parent Company
2020
–882
—
–341
2019
–935
–1
–50
426
65
99
—
–27
66
2020
–22
—
4
1
0
—
2019
–38
—
14
2
—
—
–698
–882
–17
–22
The fair value of trade receivables equals their carrying amount as the
impact of discounting is not significant. Electrolux has a significant credit
exposure on a number of major customers, primarily in the U.S., Latin Amer-
ica and Europe. Receivables concentrated to customers with credit limits
amounting to SEK 300m or more represent 40.7% (33,5) of the total trade
receivables. The creation and usage of provisions for impaired receivables
have been included in selling expenses in the income statement.
Timing analysis of trade receivables past due
Group
Parent Company
2020
20191)
2020
Total trade receivables past due,
whereof:
1,203
1,753
Past due 1 - 15 days
Past due 16 - 60 days
Past due 2 – 6 months
Past due 6 –12 months
Past due more than 1 year
Provision on expected credit loss
491
253
265
194
0
698
411
595
486
135
126
882
21
21
0
0
0
0
17
Total trade receivables
20,642 21,729
1,171
Past due, in relation to trade
receivables, %
9.2
12.1
3.2
3.8
2019
552
0
0
0
0
0
0
22
574
Total
3,846
4,465
Trade receivables not past due
18,741 19,094
1,133
Provisions in relation to trade
receivables, %
3.4
4.1
1,5
3.8
1) 2019 has been updated due to reclassification.
Trade receivables are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less pro-
vision for expected credit losses (ECL). The Group applies the simplified
approach for trade receivables and uses a matrix to estimate the expected
credit losses. The change in amount of the provision is recognized in the
ELECTROLUX ANNUAL REPORT 2020
Note 18 Financial instruments
Additional and complementary information is presented in the following
notes to the Annual Report: Note 2, Financial risk management, describes the
Group’s risk policies in general and regarding the principal financial instru-
ments of Electrolux in more detail. Note 17, Trade receivables, de scribes the
trade receivables and related credit risks.
The information in this note highlights and describes the principal financial
instruments of the Group regarding specific major terms and conditions when
applicable, and the exposure to risk and the fair values at year end.
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the entity
becomes party to the contractual provisions of the instrument. Regular way
purchases and sales of financial assets are recognized on trade date, the
date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures a financial asset or financial
liability at its fair value plus or minus, in the case of a financial asset or
financial liability not at fair value through profit or loss, transaction costs
that are incremental and directly attributable to the acquisition or issue of
the financial asset or financial liability, such as fees and commissions. Trans-
action costs of financial assets and financial liabilities carried at fair value
through profit or loss are expensed in profit or loss.
Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement
categories:
• Fair value through profit or loss (FVPL);
• Fair value through other comprehensive income (FVOCI); or
• Amortized cost.
The classification requirements for debt and equity instruments are
described below.
Debt instruments are those instruments that meet the definition of a financial
liability from the issuer’s perspective, such as trade receivables, loan
receivables as well as government bonds.
The Group classifies its debt instruments into one of the following two
measurement categories:
Amortized cost: Assets that are held for collection of contractual cash
flows where those cash flows represent solely payments of principal and
interest (SPPI), and are not designated as FVPL, are measured at amor-
tized cost. The carrying amount of these assets is adjusted by any expected
credit loss allowance recognized (see impairment below). Interest income
from these financial assets is included in the financial net using the effective
interest rate method.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria
for amortized cost are measured at fair value through profit and loss. A gain
or loss on a financial debt investment that is subsequently measured at
fair value through profit or loss and is not part of a hedging relationship
is recognized in the financial net in the period in which it arises. Interest
income from these financial assets is included in the financial net using the
effective interest rate method. Trade receivables sold on non-recourse
terms are categorized as ‘Hold to Sell’ with gain or loss reported in operat-
ing income.
The Group reclassifies debt investments when and only when its business
model for managing those assets changes.
Equity instruments are instruments that meet the definition of equity from the
issuer’s perspective; that is, instruments that do not contain a contractual
obligation to pay and that evidence a residual interest in the issuer’s net
assets. Gains and losses on equity investments at FVPL are included in the
financial net in the statement of comprehensive income. The Group does
not have any material investments in equity instruments.
Impairment and expected credit loss
The Group assesses on a forward-looking basis the expected credit losses
(ECL) associated with its debt instrument assets not carried at fair value. The
Group recognizes a provision for such losses at each reporting date. The
measurement of ECL reflects an unbiased and probability-weighted amount
based on reasonable and supportable information available such as past
events, current condition and forecasts of future economic conditions. For
trade receivables, the group applies the ‘simplified approach’, which means
that the provision for bad debts will equal the lifetime expected loss. To
ELECTROLUX ANNUAL REPORT 2020
Notes 57
All amounts in SEKm unless otherwise stated
measure the expected credit losses, trade receivables are grouped into six
categories based on shared credit risk characteristics and days past due. If
the provision is considered insufficient due to individual considerations, the
provision is extended to cover the extra anticipated losses.
Derecognition
Financial assets, or a portion thereof, are derecognized when the contrac-
tual rights to receive the cash flows from the assets have expired, or when
they have been transferred and either (i) the Group transfers substantially
all the risks and rewards of ownership, or (ii) the Group neither transfers nor
retains substantially all the risks and rewards of ownership and the Group
has not retained control of the asset.
Financial liabilities
Classification and subsequent measurement
All of the Groups financial liabilities, excluding derivatives, are
classified as subsequently measured at amortized cost.
Derecognition
Financial liabilities are derecognized when they are extinguished, i.e. when
the obligation specified in the contract is discharged, cancelled or expires.
Derivatives and hedging activities
Derivatives are initially recognized at fair value on the date on which the
derivative contract is entered into and are subsequently re-measured at
fair value. All derivatives are carried as assets when fair value is positive
and as liabilities when fair value is negative. Fair value gain or loss related
to derivatives not designated or not qualifying as hedging instruments is
recognized in profit or loss.
The Group applies the hedge accounting requirements of IFRS 9. For
derivatives designated and qualifying as hedging instruments, the method
of recognizing the fair value gain or loss depends on the nature of the item
being hedged. Derivatives are designated as either:
• Hedges of the fair value of recognized assets or liabilities or firm
commitments (fair value hedges);
• Hedges of highly probable future cash flows attributable to a recognized
asset or liability (cash flow hedges); or
• Hedges of a net investment in a foreign operation (net investment hedges).
The Group documents, at the inception of the hedge, the relationship
between hedged items and hedging instruments, as well as its risk manage-
ment objective and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at the hedge inception and
on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash
flows of hedged items based on the following hedge effectiveness require-
ments:
• There is an economic relationship between the hedged item and the
hedging instrument;
• The effect of credit risk does not dominate the value changes that result
from that economic relationship; and
• The hedge ratio of the hedging relationship is the same as that result-
ing from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as
fair value hedges are recorded in the statement of comprehensive income,
together with changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognized in equity via
other comprehensive income. The gain or loss relating to the ineffective
portion is recognized immediately in the statement of comprehensive
income. Amounts accumulated in equity are recycled to the statement
of profit or loss in the periods when the hedged item affects profit or loss.
They are recorded in the income or expense lines in which the revenue or
expense associated with the related hedged item is reported.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly
to cash flow hedges. Any gain or loss on the hedging instrument relating to
58 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 18
the effective portion of the hedge is recognized directly in equity via other
comprehensive income; the gain or loss relating to the ineffective portion is
recognized immediately in the statement of comprehensive income. Gains
and losses accumulated in equity are included in the statement of compre-
hensive income when the foreign operation is disposed of as part of the
gain or loss on the disposal.
Net debt
At year-end 2020, the Group’s financial net cash position amounted to
SEK 4,741m (net debt position of 667). The table below presents how the
Group calculates net debt and what it consists of.
Net debt
Short-term loans
Short-term part of long-term loans
Trade receivables with recourse
Short-term borrowings
Financial derivative liabilities
Accrued interest expenses and prepaid
interest income
Total short-term borrowings
Long-term borrowings
Total borrowings
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and accrued
interest income
Liquid funds
Financial net debt
Lease liabilities
Net provision for post-employment benefits
Net debt
Revolving credit facility1)
December 31
2020
1,012
277
40
2019
1,307
1,446
602
1,329
3,354
210
233
64
1,603
14,123
33
3,620
8,236
15,727
11,856
20,196
10,807
172
81
18
190
176
16
20,467
11,189
–4,741
667
2,618
3,150
3,679
1,556
3,866
7,683
23,057
10,440
1) For details on the Group’s committed revolving credit facilities, see below under “Liquid funds”.
The facilities are not included in net borrowings, but can be used for short-term and long-term
funding.
Liquid funds
Liquid funds as defined by the Group consist of cash and cash equivalents,
short-term investments, financial derivative assets and prepaid interest
expenses and accrued interest income. Cash and cash equivalents consist
of cash on hand, bank deposits and other short-term highly liquid invest-
ments with a maturity of 3 months or less.
The table to the right presents the key data of liquid funds. The carrying
amount of liquid funds is approximately equal to fair value.
Changes in liabilities arising from financing
Liquidity profile
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and accrued
interest income
Liquid funds
% of annualized net sales1)
Net liquidity
Fixed interest term, days
Effective yield, % (average per annum)
1) Liquid funds in relation to net sales, see Note 31 for definition.
December 31
2020
2019
20,196 10,807
172
81
190
176
18
16
20,467 11,189
40.6
18.4
18,864
7,569
17
0.5
12
0.8
For 2020, liquid funds, including unused committed revolving credit facilities
amounted to 40.6% (18.4) of annualized net sales, well above the Financial
Policy target of 2.5%. Net liquidity is calculated by deducting short-term bor-
rowings from liquid funds. Unused committed revolving credit facilities as
per December 31, 2020 consists of multi-currency facility of EUR 1,000m
(1,000), maturing 2023, SEK 3,000m (0), maturing 2021 and SEK 10,000m (0),
maturing 2025.
Interest-bearing liabilities
Borrowings are initially recognized at fair value net of transaction costs
incurred. After initial recognition, borrowings are valued at amortized cost
using the effective interest method.
In 2020, SEK 4,555m (2,412) of long-term borrowings matured or were
amortized. These maturities were partly refinanced to the amount of
SEK 9,793m (3,810).
At year-end 2020, the Group’s total interest-bearing liabilities amounted
to SEK 15,412m (10,989), of which SEK 14,400m (9,682) referred to long-
term borrowings including maturities within 12 months. Long-term bor-
rowings with maturities within 12 months amounted to SEK 277m (1,446).
The outstanding long-term borrowings have mainly been made under the
European Medium-Term Note Program and via bilateral loans. The major-
ity of total long-term borrowings, SEK 14,307m (9,546), is raised at Parent
Company level. Electrolux also has unused committed revolving credit facil-
ities of SEK 23,057m (10,440) (details stated above under “Liquid funds”).
However, Electrolux expects to meet any future requirements for short-term
borrowings through bilateral bank facilities and capital-market programs
such as commercial paper programs.
At year-end 2020, the average interest-fixing period for long-term
borrowings was 1.6 years (1.5). The calculation of the average interest-
fixing period includes the effect of interest-rate swaps used to manage the
interest-rate risk of the debt portfolio. The average interest rate for the total
borrowings was 1.6% (1.6) at year-end.
The fair value of the interest-bearing borrowings was SEK 14,674m
(9,575). The fair value including swap transactions used to manage the inter-
est fixing was approximately SEK 14,667m (9,577).
Cash Flow
Non Cash flow
Opening
Balance
Amorti-
zation
New
debt
Net cash
change
Acqui-
sitions
Reclassi-
fications
Additions
/Cancel-
lations
Exchange
rate
differences
Discon-
tinued
operations
Closing
Balance
2020
Long-term borrowings (including
short-term part of long-term)
Short-term borrowings (excluding
short-term part of long-term)
Lease liabilities
Total
2019
9,682
–4,555
9,793
—
1,909
3,150
—
–911
—
—
14,740
–5,466
9,793
–567
—
–567
Long-term borrowings (including
short-term part of long-term)
Short-term borrowings (excluding
short-term part of long-term)
Lease liabilities
Total
8,553
–2,412
3,810
1,597
3,4651)
13,615
—
–942
—
—
–3,354
3,810
—
303
—
303
1) Opening balance adjustment as of January 1, 2019.
—
—
—
—
33
5
31
69
9
–9
—
—
–411
—
—
–411
—
—
656
656
—
—
729
729
–528
–282
–278
–1,085
111
8
110
229
—
—
—
—
14,400
1,052
2,618
18,069
–3
–4
–243
–250
9,682
1,909
3,150
14,740
ELECTROLUX ANNUAL REPORT 2020
The table below sets out the carrying amount of the Group’s borrowings.
Notes 59
All amounts in SEKm unless otherwise stated
Borrowings
Issue/maturity date
Bond loans
2017–2024
2018–2023
2018–2023
2018–2025
2019–2024
2019–2022
2019–2024
2019–2024
2020-2022
2020-2022
2020-2023
2020-2023
2020-2025
2020-2027
Total bond loans4)
Other long-term loans
2013–20214)
2015–20214)
2017–20264)
Total other long-term loans
Long-term borrowings
Short-term part of long-term loans5)
2013–20204)
2013–20204)
2013–20214)
2017–20264)
Total short-term part of long-term loans
Other short-term loans
Total other short-term loans
Trade receivables with recourse
Short-term borrowings
Long-term and short-term borrowings
Fair value of financial derivative
liabilities
Accrued interest expenses and
prepaid interest income
Total borrowings
Description of loan
Interest rate, %
Currency
Carrying amount,
December 31
Nominal value
(in currency)
2020
2019
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Floating1) 2)
1.125
Stibor 3M + 0.58
Fixed1)
1.103
Stibor 3M + 0.75
0.885
Stibor 3M + 0.75
Stibor 3M + 0.60
0.405
Stibor 3M + 1.85
1.995
Fixed1) 3)
Fixed1)
Amortizing bank loan Nordic
Investment Bank, long-term part
Bank loan European Investment
Bank
Amortizing bank loan Nordic
Investment Bank, long-term part
Other long-term loans
Floating
Floating
Floating
Euro MTN Program
Euro MTN Program
Amortizing bank loan Nordic
Investment Bank, short-term part
Amortizing bank loan Nordic
Investment Bank, short-term part
Other short-term part of
long-term loans
Fixed1)
Floating1)
Floating
Floating
Short-term bank loans in Egypt
Short-term bank loans in Brazil
Short-term bank loans in Thailand
Short-term bank loans in Chile
Other bank borrowings and
commercial papers
Floating
Floating
Floating
Floating
SEK
SEK
SEK
USD
SEK
SEK
SEK
SEK
SEK
SEK
SEK
SEK
NOK
USD
SEK
USD
USD
SEK
SEK
SEK
USD
EGP
BRL
THB
CLP
350
200
800
73
1,000
1,250
750
750
2,550
250
1,700
1,700
500
150
154
170
63
170
830
154
12
39
325
300
13,311
350
200
803
598
1,000
1,256
750
755
2,564
250
1,700
1,700
480
1,228
13,634
0
0
425
64
489
14,123
350
200
804
681
1,000
1,260
750
757
0
0
0
0
0
0
5,802
154
1,582
592
106
2,434
8,236
0
0
170
830
154
308
94
108
29
277
30
1,446
20
513
82
153
126
372
135
171
244
1,012
40
1,329
503
1,307
601
3,354
15,452 11,590
210
233
64
33
15,727 11,856
1) Private placement
2) The interest-rate fixing profile of nominal amount SEK 100m has been adjusted with an interest-rate swap, where floating rate is swapped for fixed interest rate.
The Group applies hedge accounting of cash flows on the relation, and the net effect on the income statement from this hedge for 2020 was SEK 1m (0).
3) The interest-rate fixing profile of the loan has been adjusted with an interest-rate swap, where fixed interest rate is swapped for floating interest rate.
The Group applies hedge accounting of fair value on the relation, and the net effect on the income statement from this hedge for 2020 was SEK 3m (0) .
4) Loans raised on Parent Company level amount to a total of SEK 14,307m (9,546).
5) Long-term borrowings with maturities within 12 months are classified as short-term borrowings in the Group’s balance sheet
ELECTROLUX ANNUAL REPORT 2020
60 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 18
Other short-term loans pertain mainly to countries with capital restrictions.
The average maturity of the Group’s long-term borrowings including long-
term borrowings with maturities within 12 months was 2.8 years (3.0), at the
end of 2020. The table below presents the repayment schedule of long-term
borrowings.
Repayment schedule of long-term borrowings, December 31
Debenture and bond loans
Bank and other loans
Short-term part of long-term loans
Total
2021
—
—
277
277
2022
4,070
159
—
4,229
2023
4,403
95
—
2024
2,855
94
—
2025
1,078
94
—
2026—
1,228
47
—
Total
13,634
489
277
4,498
2,949
1,172
1,275
14,400
Commercial flows
The table below shows the forecasted transaction flows, imports and exports, for the 12-month period of 2021 and hedges at year-end 2020.
The hedged amounts are dependent on the hedging policy for each flow considering the existing risk exposure. The effect of hedging on operating
income during 2020 amounted to SEK –57m (–111). At year-end 2020, the unrealized fair value of forward contracts for hedging of forecasted transaction
flows amounted to SEK 33m (–9). Nominal amount of forecasted transacion flows hedged as per December 31, 2020, was SEK 1,368m (441). The hedge
accounting relations have an average maturity period of 6 months (7).
Forecasted transaction flows and hedges
Inflow of currency, long position
Outflow of currency, short position
Gross transaction flow
Hedges
Net transaction flow
AUD
3,327
–175
3,152
–846
2,306
BRL
3,090
–305
2,785
–864
1,922
CAD
2,213
0
2,213
–284
1,929
CHF
2,265
–241
2,025
–278
1,746
CLP
860
–71
789
–165
624
CNY
212
EUR
GBP
THB
USD
Other
Total
1,811
3,015
2,216
4,376
12,126
35,512
–2,240
–8,862
–681
–4,387 –13,768
–4,777 –35,507
–2,028
–7,051
2,335
–2,171
–9,392
7,349
1,437
–372
–661
–80
1,971
142
–590
–7,423
1,673
–2,251
–7,421
7,491
5
0
5
Maturity profile of financial liabilities and derivatives
The table below presents the undiscounted cash flows of the Group’s contractual liabilities related to financial instruments based on the remaining period at
the balance sheet date to the contractual maturity date. Floating interest cash flows with future fixing dates are estimated using the forward-forward interest
rates at year-end. Any cash flow in foreign currency is converted to Swedish krona using the FX spot rates at year-end. The short-term liabilities from account
payables are matched by positive cash flow from trade receivables. The loan maturities can be offset by the available liquidity and/or a combination by
new issued bonds, commercial papers or bank loans. On top of the other sources, Electrolux has unused committed revolving credit facilities of SEK 23,057m
(10,440), see details stated above under ‘Liquid funds’.
Maturity profile of financial liabilities and derivatives – undiscounted cash flows
Loans
Net settled derivatives
Lease liabilities
Gross settled derivatives
whereof outflow
whereof inflow
Accounts payable
Financial guarantees
Total
≤ 0.5
year
> 0.5 year
< 1 year
> 1 year
< 2 years
> 2 years
< 5 years
> 5 years
Total
–1,280
8
–486
–230
–25,286
25,056
–31,306
–893
–34,187
–88
–6
–438
36
–800
836
—
—
–4,382
–10,207
1
–673
0
–2
2
—
—
4
–916
—
—
—
—
—
—
—
–360
—
—
—
—
—
–15,957
7
–2,873
–194
–26,088
25,894
–31,306
–893
–496
–5,054
–11,119
–360
–51,216
Net gain/loss, fair value and carrying amount on financial instruments
The tables below and overleaf present net gain/loss on financial instruments, the effect in the income statement and equity, and the fair value and carrying
amount of financial assets and liabilities. Net gain/loss can include both exchange-rate differences and gain/loss due to changes in interest-rate levels.
Net gain/loss, income and expense on financial instruments
Recognized in operating income
Financial assets and liabilities at fair value through
profit and loss
Financial assets and liabilities at amortized cost
Total net gain/loss, income and expense
Recognized in financial items
Financial assets and liabilities at fair value through
profit and loss
Financial assets at amortized cost
Other financial liabilities at amortized cost
Total net gain/loss, income and expense
2020
2019
Gain/loss
in profit
and loss
Gain/loss
in OCI
Interest
income
Interest
expense
Gain/loss
in profit
and loss
Gain/loss
in OCI
Interest
income
Interest
expense
9
–176
–167
–73
—
—
–73
33
—
33
—
—
–161
–161
—
—
—
—
74
—
74
—
—
—
–67
—
–470
–537
–115
99
–16
84
—
–155
–71
–9
—
–9
–1
—
–100
–101
—
—
—
—
69
—
69
—
—
—
–141
—
–424
–565
ELECTROLUX ANNUAL REPORT 2020
Fair value and carrying amount on financial assets and liabilities
Financial assets
Financial assets at fair value through profit or loss
Whereof short-term investments
Whereof other financial assets
Financial assets at amortized cost
Whereof trade receivables
Whereof short-term investments
Whereof cash and cash equivalents
Derivatives
Whereof derivatives at fair value through profit or loss
Whereof derivatives in hedge relations
Total financial assets
Financial liabilities
Financial liabilities at amortized cost
Whereof long-term borrowings
Whereof short-term borrowings
Whereof accounts payable
Derivatives
Whereof derivatives at fair value through profit or loss
Whereof derivatives in hedge relations
Total financial liabilities
Fair value estimation
Valuation of financial instruments at fair value is done at the most accurate
market prices available. Instruments which are quoted on the market, e.g.,
the major bond and interest-rate future markets, are all marked-to-market
with the current price. The foreign-exchange spot rate is used to convert the
value into Swedish krona. For instruments where no reliable price is avail-
able on the market, cash flows are discounted using the deposit/swap curve
of the cash flow currency. If no proper cash flow schedule is available, e.g.,
as in the case with forward-rate agreements, the underlying schedule is
used for valuation purposes. To the extent option instruments are used, the
valuation is based on the Black & Scholes formula.
Note 19 Assets pledged for liabilities to credit institutions
Pledged assets
Total
Notes 61
All amounts in SEKm unless otherwise stated
2020
2019
Fair value
hierarchy
level
Fair value
Carrying
amount
Fair value
Carrying
amount
1
3
2
2
2
2
225
160
65
40,152
19,944
12
225
160
65
40,152
19,944
12
269
176
93
31,668
20,847
14
269
176
93
31,668
20,847
14
20,196
20,196
10,807
10,807
135
89
46
135
89
46
192
114
78
192
114
78
40,512
40,512
32,129
32,129
47,123
14,484
1,333
31,306
332
329
3
46,758
14,123
1,329
31,306
332
329
3
45,515
8,262
3,361
33,892
293
291
2
45,482
8,236
3,354
33,892
293
291
293
47,455
47,090
45,808
45,775
The carrying value less impairment provision of trade receivables and
payables are assumed to approximate their fair values. The fair value of
financial liabilities is estimated by discounting the future contractual cash
flows at the current market-interest rate that is available to the Group for
similar financial instruments. The Group’s financial assets and liabilities at fair
value are measured according to the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included in level 1 that are
observable for assets or liabilities either directly or indirectly.
Level 3: Inputs for the assets or liabilities that are not entirely based on
observable market data.
Group
December 31
Parent Company
December 31
2020
2019
2020
2019
—
—
6
6
—
—
—
—
ELECTROLUX ANNUAL REPORT 2020
62 Notes
All amounts in SEKm unless otherwise stated
Note 20 Share capital, number of shares and earnings per share
The equity attributable to equity holders of the Parent Company consists of
the following items:
Other paid-in capital
Other paid-in capital relates to payments made by owners and includes
share premiums paid.
Number of shares
Shares, December 31, 2019
Class A shares
Class B shares
Total
Owned by
Electrolux
Owned
by other
shareholders
Earnings per share, SEK
Total
Basic, continuing operations
Basic, discontinued operations
—
8,192,539
8,192,539
Basic, total Group
21,522,858 279,204,911 300,727,769
21,522,858 287,397,450 308,920,308
Share capital
As per December 31, 2020 the share capital of AB Electrolux consisted of
8,192,539 Class A shares and 300,727,769 Class B shares with a quota value
of SEK 5 per share. All shares are fully paid. One A share entitles the holder to
one vote and one B share to one-tenth of a vote. All shares entitle the holder
to the same proportion of assets and earnings, and carry equal rights in
terms of dividends.
Share capital
Share capital, December 31, 2019
8,192,539 Class A shares, quota value SEK 5
300,727,769 Class B shares, quota value SEK 5
Total
Share capital, December 31, 2020
8,192,539 Class A shares, quota value SEK 5
300,727,769 Class B shares, quota value SEK 5
Total
41
1,504
1,545
41
1,504
1,545
Conversion of Class A shares into Class B shares
Class A shares
Class B shares
Sold shares
Class A shares
Class B shares
Shares, December 31, 2020
Class A shares
Class B shares
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
8,192,539
8,192,539
21,522,858 279,204,911 300,727,769
21,522,858 287,397,450 308,920,308
Note 21 Untaxed reserves, Parent Company
Accumulated depreciation in excess of plan
Brands
Licenses
Machinery and equipment
Buildings
Other
Total
Group contributions
Total appropriations
Other reserves
Other reserves include the following items: cashflow hedges which refer
to changes in valuation of currency contracts used for hedging future for-
eign currency transactions; and exchange-rate differences on translation
of foreign operations which refer to changes in exchange rates when net
investments in foreign subsidiaries are translated to SEK. The amount of
exchange-rate changes includes the value of hedging contracts for net
investments. Finally, other reserves include tax relating to the mentioned
items.
Retained earnings
Retained earnings, including income for the period, include the income of
the Parent Company and its share of income in subsidiaries and associated
companies. Retained earnings also include remeasurement of provision for
post-employment benefits, reversal of the cost for share-based payments
recognized in income, income from sales of own shares and the amount
recognized for the common dividend.
Earnings per share
Income for the period attributable to
equity holders of the Parent Company
Diluted, continuing operations
Diluted, discontinued operations
Diluted, total Group
Average number of shares, million
Basic
Diluted
2020
2019
6,584
2,509
13.88
9.03
22.91
13.86
9.02
22.88
6.33
2.40
8.73
6.30
2.38
8.69
287.4
287.7
287.4
288.8
Basic earnings per share is calculated by dividing the income for the period
attributable to the equity holders of the Parent Company with the average
number of shares. The average number of shares is the weighted average
number of shares outstanding during the year, after repurchase of own
shares. Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding with the estimated num-
ber of shares from the share programs. Share programs are included in the
dilutive potential ordinary shares as from the start of each program. The
dilution in the Group is a consequence of the Electrolux long-term incentive
programs.
The average number of shares during the year has been 287,397,450
(287,397,450) and the average number of diluted shares has been
287,719,454 (288,824,237).
December 31, 2020
Appropriations
December 31, 2019
379
0
144
0
24
547
15
—
112
—
–10
117
–81
36
364
0
32
0
34
430
ELECTROLUX ANNUAL REPORT 2020
Notes 63
All amounts in SEKm unless otherwise stated
Sweden
The main defined benefit plan in Sweden is the collectively agreed pension
plan for white collar employees, the ITP 2 plan, and it is based on final salary.
Benefits in payment are indexed according to the decisions of the Alecta
insurance company, typically those follow inflation. The plan is semi-closed,
meaning that only new employees born before 1979 are covered by the
ITP 2 solution. A defined contribution solution (ITP 1) is offered to employees
born after 1978. Electrolux has chosen to fund the pension obligation (ITP 2)
by a pension foundation. The foundation’s Board consists of equal numbers
of representatives from the employer and employees. There is no funding
requirement for an ITP pension foundation. Benefits are paid directly by the
company and, in case of surplus, the company can reimburse itself for the
current and the previous year’s pension cost and/or take a contribution
holiday.
Germany
There are several defined benefit plans based on final salary in Germany.
Benefits in payment are indexed every three years according to inflation
levels. All plans are closed for new participants. Electrolux has arranged
a Contractual Trust Arrangement (CTA) and the funds are held by a local
bank who acts as the trustee for the scheme. The assets are managed by
a fund management company, Electrolux performs an oversight on the
strategy via an investment committee with members both from Group staff
functions and the local German company. No minimum funding require-
ments or regular funding obligations apply to CTAs. If there is a surplus
under both German GAAP and IFRS rules, Electrolux can take a refund up to
the German GAAP surplus. Benefits are paid directly by the company and
Electrolux can refund itself for pension pay-outs. Over time, Electrolux will
have access to any residual funds after the last beneficiary has left the plan.
Switzerland
In Switzerland benefits are career average in nature, with indexation
of benefits following decisions of the foundation board, subject to legal
minima. Contributions are paid to the pension foundation and a recovery
plan has to be set up if the plans are underfunded on the local funding
basis. Swiss laws do not state any specific way of calculating an employer‘s
additional contribution and because of that there is normally no mini-
mum funding requirement. The assets in the foundation is to a large extent
handled by local banks and they are working with both asset allocation
and selection within a framework decided by the Swiss foundation board.
Benefits are paid from the plan assets.
Other countries
There is a variety of smaller plans in other countries and the most important
of those are in France, Italy and Canada. The pension plans in France and
Italy are mainly unfunded. In Canada there are both funded and unfunded
pension plans. A mix of final salary and career average exists in these coun-
tries. Some plans are open for new entrants.
Note 22 Post-employment benefits
Post-employment benefits
The Group sponsors pension plans in many of the countries in which it has
significant activities. Pension plans can be defined contribution or defined
benefit plans or a combination of both. Under defined benefit pension
plans, the company enters into a commitment to provide post-employment
benefits based upon one or several parameters for which the outcome is
not known at present. For example, benefits can be based on final salary, on
career average salary, or on a fixed amount of money per year of employ-
ment. Under defined contribution plans, the company’s commitment is to
make periodic payments to independent authorities or investment plans,
and the level of benefits depends on the actual return on those invest-
ments. Some plans combine the promise to make periodic payments with
a promise of a guaranteed minimum return on the investments. These plans
are also defined benefit plans.
In some countries, Electrolux makes provisions for compulsory severance
payments. These provisions cover the Group’s commitment to pay employees
a lump sum upon reaching retirement age, or upon the employees’ dismissal
or resignation.
In addition to providing pension benefits and compulsory severance
payments, the Group provides healthcare benefits for some of its employees
in certain countries, mainly in the U.S.
The cost for pension is disaggregated into three components; service
cost, financing cost or income and remeasurement effects. Service cost
is reported within Operating income and classified as Cost of goods sold,
Selling expenses or Administrative expenses depending on the function
of the employee. Financing cost or income is recognized in the Financial
items and the remeasurement effects in Other comprehensive income. The
Projected Unit Credit Method is used to measure the present value of the
obligations and costs.
Net provisions for post-employment benefits in the balance sheet repre-
sent the present value of the Group’s obligations less market value of plan
assets. The remeasurements of the obligations are made using actuarial
assumptions determined at the balance sheet date. Changes in the present
value of the obligations due to revised actuarial assumptions and experi-
ence adjustments on the obligation are recorded in Other comprehensive
income as remeasurements. The actual return less calculated interest
income on plan assets is also recorded in other comprehensive income as
remeasurements. Past-service costs are recognized immediately in income
for the period.
Some features of the defined benefit plans in the main countries are
described below.
USA
The number of pension plans in the U.S. has been significantly reduced over
the years through plan consolidation. The defined benefit plans are closed
for future accruals and employees are offered defined contribution plans.
Pensions in payment are not generally subject to indexation. Funding posi-
tion is reassessed every year with a target to restore the funding level over
seven years. Surplus in the fund can be used to take a contribution holiday
and refunds are taxed at 50%. Benefits are mainly paid from the plan assets.
United Kingdom
The defined benefit plan is closed for future accruals and employees are
offered defined contribution. The funding position is reassessed every three
years and a schedule of contributions is agreed between the Trustee and
the company. The Trustee decides the investment strategy and consults with
the company. Benefits are paid from the plan assets.
ELECTROLUX ANNUAL REPORT 2020
64 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 22
Explanation of amounts in the financial statements relating to defined benefit obligations.
Information by country December 31, 2020
Amounts included in the balance sheet
Present value of funded and unfunded obligations
7,635
1,837
7,165
4,644
4,136
2,674
783
28,874
Fair value of plan assets (after change in asset ceiling)
–8,316
–1,828
–6,978
–2,523
–2,755
–2,611
–184
–25,195
USA
Medical
USA
UK
Sweden Germany
Switzer–
land
Other
Total
Total (surplus)/deficit
Whereof reported as:
Pension plan assets
Provisions for post-employment benefit plans
Total funding level for all pension plans, %
Average duration of the obligation, years
Amounts included in total comprehensive income
Service cost
Net interest cost
Remeasurements (gain)/loss
Total expense (gain) for defined benefit plans
Expenses for defined contribution plans
Amounts included in the cash flow statement
Contributions by the employer
Reimbursement
Benefits paid by the employer
Major assumptions for the valuation of the liability
Longevity, years1)
Male
Female
Inflation, %2)
Discount rate, %
–681
—
—
109
9.9
7
–1
–371
–365
—
—
29
20.7
22.6
3.00
2.30
9
—
—
100
9.8
—
5
–126
–121
27
—
—
20.7
22.3
5.00
2.30
187
2,121
1,381
—
—
97
—
—
54
—
—
67
63
—
—
98
15.5
18.7
14.6
13.2
15
1
167
183
30
—
—
20.8
23.6
3.00
1.50
182
21
135
338
—
–83
115
23.0
24.8
1.75
1.10
23
12
156
191
—
—
165
20.4
23.8
1.80
0.70
47
0
–131
–84
30
—
—
22.7
24.8
1.00
0.10
599
3,679
—
—
23
—
4
4
–19
–11
1
—
34
—
—
—
—
1,272
4,951
87
13.7
277
41
–189
129
600
88
–83
342
21.2
23.6
2.37
1.44
Information by country December 31, 2019 (including discontinued operations)
Amounts included in the balance sheet
Present value of funded and unfunded obligations
8,823
2,232
7,526
4,305
4,184
3,753
1,008
31,831
Fair value of plan assets (after change in asset ceiling)
–9,198
–2,067
–7,479
–2,519
–2,768
–3,522
–218
–27,771
USA
Medical
USA
UK
Sweden Germany
Switzer–
land
Other
Total
–375
165
1,786
1,416
231
790
4,060
Total (surplus)/deficit
Whereof reported as:
Pension plan assets
Provisions for post-employment benefit plans
Total funding level for all pension plans, %
Average duration of the obligation, years
Amounts included in total comprehensive income
Service cost5)
Net interest cost
Remeasurements (gain)/loss
Total expense (gain) for defined benefit plans
Expenses for defined contribution plans
Amounts included in the cash flow statement
Contributions by the employer
Reimbursement
Benefits paid by the employer
Major assumptions for the valuation of the liability
Longevity, years1)
Male
Female
Inflation, %2)
Discount rate, %
47
—
—
99
—
—
93
—
—
59
—
—
66
—
—
94
10.4
15.7
18.5
14.5
13.5
367
—
–277
90
27
—
20
20.7
22.7
6.25
3.00
11
–15
172
168
78
23
421
522
20
19
49
88
—
—
—
—
–103
119
—
–334
166
21.0
23.9
3.00
1.80
23.0
24.8
1.75
1.40
20.2
23.7
1.70
0.90
53
1
–85
–31
43
—
—
22.6
24.7
1.25
0.10
—
—
104
10.3
–349
6
–287
–630
—
—
—
20.7
22.7
3.00
3.00
—
—
22
—
–87
10
110
33
23
—
56
—
—
—
—
1,0563)
5,1164)
87
13.6
93
44
103
240
636
93
–437
361
21.2
23.7
2.36
1.82
1) Expressed as the average life expectancy of a 65-year-old person in number of years.
2) General inflation impacting salary and pensions increase. For USA Medical, the number refers to the inflation of healthcare benefits.
3) Whereof pension plan assets amount to SEK 1,043m for continuing operations and SEK13m for discontinued operations.
4) Whereof provisions for post-employment benefit plans amount to SEK 4,909m for continuing operations and SEK 208m for discontinued operations.
5) Includes a gain of SEK 200m due to plan amendment in France and settlement in Sweden and Norway.
ELECTROLUX ANNUAL REPORT 2020
Notes 65
All amounts in SEKm unless otherwise stated
Risks
There are mainly three categories of risks related to defined benefit obli-
gations and pension plans. The first category relates to risks affecting the
actual pension payments. Increased longevity and inflation of salary and
pensions are the principle risks that may increase the future pension pay-
ments and, hence, increase the pension obligation. The second category
relates to investment return. Pension plan assets are invested in a variety
of financial instruments and are exposed to market fluctuations. Poor
investment return may reduce the value of investments and render them
insufficient to cover future pension payments. The final category relates to
measurement and affects the accounting for pensions. The discount rate
used for measuring the present value of the obligation may fluctuate which
impacts the valuation of the Defined Benefit Obligation (DBO). The discount
rate also impacts the size of the interest income and expense that is reported
in the Financial items and the service cost. When determining the discount
rate, the Group uses AA rated corporate bond indexes which match the
duration of the pension obligations. In Sweden, mortgage-backed bonds
are used for determining the discount rate. Expected inflation and mortality
assumptions are based on local conditions in each country and changes in
those assumptions may also affect the measured obligation and, therefore,
the accounting entries.
Investment strategy and risk management
The Group manages the allocation and investment of pension plan assets
with the aim of decreasing the total pension cost over time. This means that
certain risks are accepted in order to increase the return. The investment
horizon is long-term and the allocation ensures that the investment port-
folios are well diversified. In some countries, a so called trigger-points
scheme is in place, whereby the investment in fixed income assets increases
as the funding level improves. The Board of Electrolux annually approves the
limits for asset allocation. The final investment decision often resides with
the local trustee that consults with Electrolux. The risks related to pension
obligations, e.g., mortality exposure and inflation, are monitored on an
ongoing basis. Buy-out premiums are also monitored and other potential
liability management actions are also considered to limit the exposure to
the Group.
Cont. Note 22
Reconciliation of change in present value of funded
and unfunded obligations
Opening balance, January 1
Current service cost
Special events
Interest expense
Remeasurement arising from changes
in financial assumptions
Remeasurement from changes in
demographic assumptions
Remeasurement from experience
Contributions by plan participants
Benefits paid
Exchange differences
Settlements and other
Total
Discontinued operations, obligations1)
Closing balance, December 31
1) 2019 updated with gross effects for discontinued operations.
Reconciliation of change in the fair value of plan assets
Opening balance, January 1
Interest income1)
Return on plan assets, excluding amounts included in
interest1)
Effect of asset ceiling
Net contribution by employer
Contribution by plan participants
Benefits paid
Exchange differences
Settlements and other
Total
Discontinued operations, plan assets2)
Closing balance, December 31
1) The actual return on plan assets amounts to SEK 2,009m (4,174).
2) 2019 updated with gross effects for discontinued operations.
2020
2019
30,834 28,646
248
6
540
246
–96
808
1,485
3,379
–222
–112
35
–63
206
50
–1,676 –1,808
–2,299
1,106
34
–643
28,874 31,831
—
–997
28,874 30,834
2020
2019
26,938 24,832
499
764
1,510
3,410
–170
5
35
14
–344
50
–1,334 –1,447
–2,312
1,096
23
–604
25,195 27,771
—
–833
25,195 26,938
Below is the sensitivity analysis for the main financial assumptions and the potential impact on the present value of the defined pension obligation. Note that
the sensitivities are not meant to express any view by Electrolux on the probability of a change.
Sensitivity analysis on defined benefit obligation
Longevity +1 year
Inflation +0.5%1)
Discount rate +1%
Discount rate –1%
USA
290
0
–690
898
USA
Medical
UK
Sweden Germany
115
94
–167
195
333
317
–1,011
1,299
169
441
–725
955
103
289
–555
707
Switzer-
land
92
27
–330
456
Other
6
16
–63
74
Total
1,107
1,185
–3,541
4,584
1) The inflation change feeds through to other inflation-dependent assumptions, i.e., pension increases and salary growth.
In the coming year, the Group expects to pay a total of SEK 304m in contributions to the pension funds and as payments of benefits directly to the employees.
MARKET VALUE OF PLAN ASSETS BY CATEGORY
2020
2019
Fixed income, SEK 12,558m
Equity, SEK 6,815m
Hedge funds, SEK 1,887m
Real estate, SEK 2,328m
Infrastructure, SEK 426m
Private equity, SEK 173m
Cash, SEK 1,008m
Fixed income, SEK 13,059m
Equity, SEK 8,437m
Hedge funds, SEK 2,140m
Real estate, SEK 2,631m
Infrastructure, SEK 500m
Private equity, SEK 136m
Cash, SEK 868m
ELECTROLUX ANNUAL REPORT 2020
66 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 22
Market value of plan assets without quoted prices
Fixed income
Real estate
Infrastructure
Private equity
December 31
2020
1,052
2,328
426
173
2019
915
2,631
500
136
The Swedish pension foundation carries plan assets at an amount of
SEK 200m related to property used by Electrolux.
Governance
Defined benefit pensions and pension plan assets are governed by the
Electrolux Pension Board, which resumes 3 to 4 times per year and has the
following responsibilities:
• Implementation of pension directives of the AB Electrolux Board of
Directors.
• Evaluation and approval of new plans, changes to plans or termination
of plans.
• Approval of the Group’s and local pension funds’ investment strategies.
• Approval of the Group’s global and local benchmarks for follow up of
pension plan assets.
• Approval of the election of company representatives in the Boards of
Trustees.
• Approval of the financial and actuarial assumptions to be used in the
measurement of the defined benefit obligations.
Parent Company
According to Swedish accounting principles adopted by the Parent
Company, defined benefit liabilities are calculated based upon officially
provided assumptions, which differ from the assumptions used in the Group
under IFRS. The pension benefits are secured by contributions to a sepa-
rate fund or recorded as a liability in the balance sheet. The accounting
principles used in the Parent Company’s separate financial statements
differ from the IFRS principles, mainly in the following:
• The pension liability calculated according to Swedish accounting
principles does not take into account future salary increases.
• The discount rate used in the Swedish calculations is set by the Swedish
Pension Foundation (PRI) and was for 2020 4.0% (4.0). The rate is the same
for all companies in Sweden.
• Changes in the discount rate and other actuarial assumptions are
Change in fair value of plan assets
Opening balance, January 1, 2019
Actual return on plan assets
Contributions and compensation to/from the fund
Closing balance, December 31, 2019
Actual return on plan assets
Contributions and compensation to/from the fund
Closing balance, December 31, 2020
Amounts recognized in the balance sheet
Present value of pension obligations
Fair value of plan assets
Surplus/deficit
Limitation on assets in accordance with Swedish
accounting principles
Net provisions for pension obligations
Whereof reported as provisions for pensions
Amounts recognized in the income statement
Current service cost
Interest cost
recognized immediately in the profit or loss and the balance sheet.
• Deficit must be either immediately settled in cash or recognized as a
liability in the balance sheet.
• Surplus cannot be recognized as an asset, but may in some cases be
refunded to the company to offset pension costs.
Total expenses for defined benefit pension plans
Insurance premiums
Total expenses for defined contribution plans
Special employer’s contribution tax
Change in the present value of defined benefit pension obligation for
funded and unfunded obligations
Opening balance, January 1, 2019
1,722
442
2,164
Funded Unfunded
Total
Current service cost
Interest cost
Benefits paid
48
70
–81
Closing balance, December 31, 2019
1,759
Current service cost
Interest cost
Benefits paid
70
71
–85
Closing balance, December 31, 2020
1,815
7
18
–30
437
15
18
–30
440
55
88
–111
2,196
85
89
–115
2,255
Funded
2,351
320
–133
2,538
108
–83
2,563
December 31
2020
2019
–2,255 –2,196
2,563
2,538
308
342
–748
–440
–440
–779
–437
–437
2020
2019
85
89
174
112
112
34
3
323
–83
240
55
88
143
157
157
31
2
333
–133
200
Cost for credit insurance FPG
Total pension expenses
Compensation from the pension fund
Total recognized pension expenses
The Swedish Pension Foundation
The pension liabilities of the Group’s Swedish defined benefit pension
plan (PRI pensions) are funded through a pension foundation established
in 1998. The market value of the assets of the foundation amounted at
December 31, 2020, to SEK 2,563m (2,551m) and the pension commitments
to SEK 1,815m (1,759). The Swedish Group companies recorded a liability
to the pension fund as per December 31, 2020, in the amount of SEK 0m
(0). Contributions to the pension foundation during 2020 amounted to
SEK 0m (0). Contributions from the pension foundation during 2020
amounted to SEK 83m (585).
ELECTROLUX ANNUAL REPORT 2020
Provisions for
restructuring
Warranty
commitments
Claims
2,095
1,397
Notes 67
All amounts in SEKm unless otherwise stated
Group
Parent Company
Other
2,863
—
Total
7,565
5
1,733
5,658
—
421
–491
–1,258
–4,297
—
50
—
1,377
280
–56
70
–361
2,991
556
1,097
2,436
–266
210
–692
8,183
2,606
5,577
5
2,178
–1,984
–31
68
–245
2,086
1,015
1,071
2,086
1,377
2,991
8,183
10
2,407
–2,273
–26
—
–164
2,039
1,004
1,035
—
415
–497
—
—
–142
1,153
246
907
—
10
2,083
5,380
–863
–424
–11
–370
3,406
637
2,769
–4,236
–572
128
–809
8,083
2,515
5,568
Provisions for
restructuring
Warranty
commitments
Other
174
—
471
–87
–23
–1
0
534
187
347
534
—
297
–250
–16
—
–14
551
370
181
473
—
370
–396
—
5
—
452
120
332
452
—
68
—
—
—
–13
507
133
374
44
—
8
–14
—
—
0
38
—
38
38
—
42
–25
–2
—
–1
52
—
52
Total
691
—
849
–497
–23
4
0
1,024
307
717
1,024
—
407
–275
–18
—
–28
1,110
503
607
1,210
—
1,326
–564
–179
22
–86
1,729
755
973
1,729
—
475
–602
–122
139
–133
1,486
629
857
Note 23 Other provisions
Opening balance, January 1, 2019
Acquisitions of operations
Provisions made
Provisions used
Unused amounts reversed
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Of which current provisions
Of which non-current provisions
Opening balance, January 1, 2020
Acquisitions of operations
Provisions made
Provisions used
Unused amounts reversed
Reclassifications
Exchange-rate differences
Closing balance, December 31, 2020
Of which current provisions
Of which non-current provisions
Provisions are recognized when the Group has a present obligation as a
result of a past event, and it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognized as a provision is the
best estimate of the expenditure required to settle the present obligation at
the balance sheet date. Where the effect of time value of money is material,
the amount recognized is the present value of the estimated expenditures.
Provisions for warranty are recognized at the date of sale of the products
covered by the warranty and are calculated based on historical data for
similar products. Provisions for warranty commitments are recognized as a
consequence of the Group’s policy to cover the cost of repair of defective
products. Warranty is normally granted for one to two years after the sale.
Restructuring provisions are recognized when the Group has both
adopted a detailed formal plan for the restructuring and either started the
plan implementation or communicated its main features to those affected
by the restructuring. Provisions for restructuring represent the expected
costs to be incurred as a consequence of the Group’s decision to close
some factories, rationalize production and reduce personnel, both for
newly acquired and previously owned companies. The amounts are based
on management’s best estimates and are adjusted when changes to these
estimates are known. The larger part of the restructuring provisions as per
December 31, 2020, will be consumed in 2021 and 2022.
Provisions for claims refer to the Group’s captive insurance companies.
Other provisions include mainly provisions for tax, environmental liabilities,
asbestos claims or other liabilities. The timing of any resulting outflows for
provisions for claims and other provisions is uncertain.
Note 24 Other liabilities
Group
December 31
Parent Company
December 31
Accrued holiday pay
2020
950
2019
928
Other accrued payroll costs
2,038
1,597
Accrued interest expenses
Contract liabilities1)
Other accrued expenses
Prepaid income grants
Other prepaid income
VAT liabilities
Personnel related liabilities
64
6,354
3,778
651
134
937
876
33
6,005
3,387
828
124
957
836
Other operating liabilities
1,332
2,126
2020
2019
268
570
61
—
717
—
185
—
—
—
223
261
29
—
525
—
210
—
—
—
Total
17,114 16,821
1,801
1,248
1) Movement in contract liabilities is presented in Note 4.
Other accrued expenses include for example accruals for fees, advertising
and sales promotion. Other operating liabilities include for example opera-
tional taxes.
ELECTROLUX ANNUAL REPORT 2020
68 Notes
All amounts in SEKm unless otherwise stated
Note 25 Contingent assets and liabilities
Guarantees and other
commitments
On behalf of subsidiaries
On behalf of external
counterparties
Total
Group
December 31
Parent Company
December 31
2020
2019
2020
2019
—
—
—
0
893
893
939
939
927
927
1,015
1,015
A large part of the guarantees and other commitments on behalf of external
counterparties, is related to U.S. sales to dealers financed through external
finance companies with a regulated buy-back obligation of the products in
case of dealer’s bankruptcy.
In addition to the above contingent liabilities, guarantees for fulfillment of
contractual undertakings are given as part of the Group’s normal course of
business. There was no indication at year-end that payment will be required
in connection with any contractual guarantees.
Legal proceedings
Litigation and claims related to asbestos are pending against the Group in
the U.S. Almost all of the cases refer to externally supplied components used
in industrial products manufactured by discontinued operations prior to the
early 1970s. The cases involve plaintiffs who have made substantially identi-
cal allegations against other defendants who are not part of the Electrolux
Group.
As of December 31, 2020, the Group had a total of 3,403 (3,897) cases
pending, representing approximately 3,440 (approximately 3,933) plaintiffs.
During 2020, 930 new cases with 931 plaintiffs were filed and 1,424 pending
cases with approximately 1,424 plaintiffs were resolved.
The Group continues to operate under a 2007 agreement with certain
insurance carriers who have agreed to reimburse the Group for a portion
of its costs relating to certain asbestos lawsuits. The agreement is subject
to termination upon 60 days notice and if terminated, the parties would
be restored to their rights and obligations under the affected insurance
policies.
It is expected that additional lawsuits will be filed against Electrolux.
It is not possible to predict the number of future lawsuits. In addition, the
outcome of asbestos lawsuits is difficult to predict and Electrolux cannot
provide any assurances that the resolution of these types of lawsuits will not
have a material adverse effect on its business or on results of operations in
the future.
The Group is involved in a legal proceeding in Egypt relating to the priva-
tization of an Egyptian subsidiary. The proceeding is currently on-going in
the court of first instance in Cairo, Egypt. Electrolux believes that the lawsuit
is without legal merit.
In October 2013, Electrolux became subject of an investigation by the
French Competition Authority regarding a possible violation of antitrust
rules. The Authority has thereafter decided to conduct two separate
investigations whereof one was completed in December 2018. The other
investigation is still ongoing, and the Authority has so far not communicated
any conclusions. Given the nature of the investigation, it cannot be ruled out
that the outcome could have a material impact on Electrolux financial result
and cash flow. At this stage it is however not possible to evaluate the extent
of such an impact.
In November 2017, the U.S. Department of Commerce (DOC) informed
the Group that it had set a preliminary and significantly increased tariff rate
of 72.41% on washing machines manufactured in Mexico by Electrolux and
imported into the U.S. between February 2016 and January 2017. In March
2018, Electrolux was informed by DOC that this preliminary tariff rate was
determined as final. Electrolux has appealed DOC’s decision and a Panel of
arbitrators appointed by the NAFTA Secretariat will review and decide on
the matter. A hearing was held in November 2020 but the Panel has not yet
rendered its decision. If the tariff rate is not significantly reduced as a result
of the appeal process, it could lead to a one-time cost of up to USD 70m.
The one-time cost, if any, is subject to a current interest rate of 5%. However,
as Electrolux believes that the company has a strong legal case and that
success is more likely than not, a provision related to this potential cost has
not been made. No assurances can however be given that the outcome
will be successful, as appealing administrative determinations is inherently
challenging.
In 2019 an order was issued by the Italian Environmental Authorities for
certain remediation actions connected to contamination at Electrolux sub-
sidiary INFA s.p.a. (“INFA”) former manufacturing site in Aviato (Italy), a site
(land and factory) that INFA divested to the current operator of the site,
Sarinox s.p.a (“Sarinox”), in 2001. Pursuant to the order, addressed against
Sarinox, Sarinox shall, inter alia, make a contribution of 42m EUR to projects
improving the groundwater quality in the Friuli region, Italy, and take certain
other measures to clean 42m cubic meters of contaminated groundwater
in the region. Sarinox has objected to the order by appealing to the admin-
istrative court of Trieste. In 2020, the administrative court ruled in favor of
Sarinox. It is still possible to appeal the court ruling but so far the ruling has
not been appealed. As it is possible that the situation can result in a liability
for INFA in its capacity as former owner and operator or seller of the site,
INFA filed a motion to join the proceedings to protect its interests. No provi-
sion related to this matter has been set.
ELECTROLUX ANNUAL REPORT 2020
Notes 69
All amounts in SEKm unless otherwise stated
Italy 2018), UNIC complements the Electrolux portfolio of products for hot,
cold and frozen beverages.
The Unic group’s net sales and operating income in 2019 amounted to
EUR 16.7m and EUR –1.6m respectively, approximately SEK 176m and SEK
–17m respectively. The acquired business contributes to Electrolux con-
solidated accounts, within the business Electrolux reports as discontinued
operations and held for distribution, in 2019 by EUR 10.7m in net sales and
EUR –1.6m in operating income, approximately SEK 113m and SEK –17m
respectively. Goodwill recognized in the transaction mainly relates to syn-
ergies with Electrolux operations in this business segment. Goodwill is not
expected to be deductible for income tax.
The operations are included in discontinued operations, Electrolux
Professional.
Transaction costs
Transaction costs related to the acquisitions in 2019 amount to SEK 4.2m
and have been expensed as incurred during the acquisition process in
2019 (SEK 3.5m) and 2018 (SEK 0.7m). The costs have been reported in the
business area’s operating income.
Discontinued operations
In January 2019, Electrolux announced that the company was preparing for
the separation and distribution of its Professional Products business area
(‘Electrolux Professional’). On December 5, 2019, the Electrolux Board of
Directors decided to propose to the Electrolux shareholders to distribute
the shares in the wholly-owned subsidiary Electrolux Professional AB to
the shareholders of Electrolux. The decision was taken by an Extraordinary
General Meeting on February 21, 2020, and Electrolux Professional AB was
listed on Nasdaq Stockholm on March 23, 2020. Electrolux Professional
was classified as held for distribution to owners as per December 2019
and accounted for under the applicable principles for assets held for sale
and discontinued operations IFRS 5 ‘Non-current assets held for sale and
discontinued operations’ and IFRIC 17 ‘Distribution of non-cash assets to
owners’. All related effects are referred to as ‘Discontinued operations’.
As per December 2019, Electrolux Professional was reported as discon-
tinued operations in the consolidated statement of comprehensive income.
The consolidated statement of comprehensive income for comparative
periods were restated accordingly. The Electrolux Professional results were
excluded from the individual lines of the consolidated income statement
with the total net reported as ‘Income for the period, discontinued opera-
tions’, in full attributable to equity holders of the Parent Company.
The consolidated cash flow statements include a full cash flow statement
for continuing operations and total cash flow for discontinued operations.
In the balance sheet as per December 31, 2019, assets and liabilities of
Electrolux Professional were classified as ‘Discontinued operations, assets
held for distribution’ and ‘Discontinued operations, liabilities held for distri-
bution’ respectively.
The distribution of Electrolux Professional resulted in a settlement gain,
calculated as the difference between the carrying amount of the assets
distributed and the carrying amount of the dividend payable, measured at
the fair market value of Electrolux Professional at listing.
Details on income statement, balance sheet and cash flow for discon-
tinued operations are presented below. The financial information consists
of Electrolux Professional’s contribution to Electrolux Group consolidated
financial information up until the separation on March 23, 2020.
Income statement, discontinued operations
Net sales
Cost of goods sold
Gross operating income
Selling expenses
Administrative expenses
Other operating income and expenses
Operating income
Financial items, net
Income after financial items
Taxes
Income for the period, discontinued operations
2020
2019
1,884
9,281
–1,191 –6,040
693
3,241
–349 –1,699
–161
–584
2
185
–1
184
–40
144
32
991
12
1,003
–314
688
Note 26 Acquired, divested and discontinued operations
2020
2019
Acquired operations
Total
Sydney
Appliance
Installations
UNIC
Total
Consideration:
Cash paid for acquisitions
made during the year
Fair value of holding
Deferred consideration
Total consideration
Recognized amounts
of assets acquired and
liabilities assumed:
Total net assets acquired
Assumed net debt / cash
Goodwill
Total
73
48
—
121
55
54
12
121
26
—
13
39
0
0
39
39
410
—
0
410
143
–69
336
410
436
—
13
449
143
–69
375
449
Payments for acquisitions:
2020
2019
Cash paid for acquisitions made during the year
Cash and cash equivalents in acquired operations
Cash paid related to deferred consideration
from acquisitions made in earlier years
Payments for acquisition of non-controlling interest in
CTI SA and Somela SA, Chile
Total paid
73
–66
0
0
8
436
–4
35
0
467
Acquisitions in 2020
Guangdong De Yi Jie Appliances
In August, 2020, Electrolux acquired 60% of the shares in the Chinese com-
pany Guangdong De Yi Jie Appliances Co., LTD, a company that sells AEG
household appliances in China. Before the acquisition, Electrolux held
40% of the shares in the company. The acquired company is accounted
for as a fully owned subsidiary as from August 31, 2020. The transaction has
resulted in a preliminary goodwill of SEK 12m. The net cash flow effect from
the acquisition is SEK –7m. .
The operations are included in business area Asia-Pacific, Middle East
and Africa.
Acquisitions in 2019
Sydney Appliance Installations
On February 1, 2019, the acquisition of the Australian appliance installa-
tion and repair service operation, Sydney Appliance Installations (SAI), was
completed through an asset deal. The acquisition fits well into the existing
business model increasing Electrolux in-house after sales capacity in the
region. The purchase price for the operation contains an upfront payment
of AUD 3.9m, approximately SEK 26m and a deferred consideration of up to
AUD 2m, approximately SEK 13m, of which AUD 1.7m is dependent on future
financial performance. The SAI operation’s net sales and operating income
in 2019 amounted to AUD 3.1m and AUD 0.5m respectively, approximately
SEK 21m and SEK 3.3m respectively. The acquired business contributed
to Electrolux consolidated accounts in 2019 by AUD 2.9m in net sales and
AUD 0.4m in operating income, approximately SEK 19m and SEK 2.9m
respectively. Goodwill to be recognized in the transaction mainly relates to
the value of the assembled workforce and synergies with Electrolux appli-
ance business. Goodwill is not expected to be deductible for income tax.
The operations are included in business area Asia-Pacific, Middle East
and Africa.
Unic SAS
On April 24, 2019, the acquisition of the French producer of professional
espresso coffee machines, Unic S.A.S, was completed by acquiring 100% of
the shares in a cash deal. The purchase price for the shares amounts to EUR
39m with a net debt assumed, estimated at EUR 6.6m. The company’s head-
quarters and main manufacturing facility are located in southern France,
with subsidiaries in the U.S. and Japan. The acquisition is part of Electrolux
Professional Products’ strategy to grow with a complete offering of food ser-
vice, beverage and laundry solutions. Together with previous acquisitions
(Grindmaster-Cecilware in North America 2017 and SPM Drink Systems in
ELECTROLUX ANNUAL REPORT 2020
70 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 26
Balance sheet, discontinued operations
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other intangible assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Other current assets
Total current assets
Total assets
Long-term borrowings
Long-term lease liabilities
Other provisions
Total non-current liabilities
Accounts payable
Short-term borrowings
Short-term lease liabilities
Other current liabilities
Total current liabilities
Total liabilities
Cash flow, discontinued operations
Cash flow from operations
Cash flow from investments
Cash flow from financing
Total cash flow
2020
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2019
1,214
238
1,821
388
397
4,057
1,265
1,687
1,025
3,977
8,034
3
172
846
1,021
1,485
4
72
1,370
2,930
3,951
2020
68
–87
1,195
1,177
2019
1,120
–689
–134
297
ELECTROLUX ANNUAL REPORT 2020
Notes 71
All amounts in SEKm unless otherwise stated
Note 27 Employees and remuneration
Employees and employee benefits
In 2020, the average number of employees was 47,543 (48,652), of which
29,644 (29,747) were men and 17,899 (18,905) were women.
A detailed specification of the average number of employees by country
has been submitted to the Swedish Companies Registration Office and is
available upon request from AB Electrolux, Investor Relations. See also
Electrolux website www.electroluxgroup.com.
Average number of employees, by geographical area
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Total
Group
2020
2019
18,727 18,909
6,752
6,640
14,113 14,844
7,951
8,259
47,543 48,652
Salaries, other remuneration and employer contributions
Parent Company
whereof pension costs1)
Subsidiaries
whereof pension costs
Total
whereof pension costs
2020
Salaries and
remuneration
Employer
contributions
1,050
—
14,616
—
15,666
—
624
294
2,785
583
3,409
877
1) Includes SEK 10m (8) refering to the President’s predecessors according to local GAAP.
Salaries and remuneration for Board members, senior managers and other employees
Parent Company
Other
Total
Board mem-
bers and senior
managers1)
75
326
401
2020
Other
employees
975
14,290
15,265
1) According to the definition of Senior managers in the Swedish Annual Accounts Act.
2019
Salaries and
remuneration
Employer
contributions
1,063
—
15,255
—
16,318
—
577
243
2,861
493
3,438
736
Total
1,640
243
18,116
493
19,756
736
2019
Board mem-
bers and senior
managers1)
59
338
397
Other
employees
1,004
14,917
15,921
Total
1,063
15,255
16,318
Total
1,674
294
17,401
583
19,075
877
Total
1,050
14,616
15,666
Of the Board members in Group companies, 80 (91) were men and 15 (14) women, of whom 5 (6) men and 3 (3) women in the Parent Company. According
to the definition of Senior managers in the Swedish Annual Accounts Act, the number of Senior managers in the Group consisted of 182 (178) men and 78
(75) women, of whom 7 (6) men and 2 (2) women in the Parent Company. The total pension cost for Board members and senior managers in the Group
amounted to SEK 29m (33).
Compensation to Board members
´000 SEK
Staffan Bohman, Chairman
Petra Hedengran
Henrik Henriksson (from AGM 2020)
Hasse Johansson (up to AGM 2020)
Ulla Litzén
Bert Nordberg (up to AGM 2019)
Karin Overbeck (from AGM 2020)
Fredrik Persson
David Porter
Jonas Samuelson, President
Ulrika Saxon (up to AGM 2020)
Kai Wärn
Ulf Carlsson (up to AGM 2020)
Mina Billing (from AGM 2020)
Viveca Brinkenfeldt Lever
Peter Ferm
Total compensation
2020
2019
Ordinary
compen sation
Compen sation for
committee work
Total
compen sation
Ordinary
compen sation
Compen sation for
committee work
Total
compen sation
2,200
640
480
160
640
—
480
640
640
—
160
640
—
—
—
—
260
310
—
—
280
—
—
160
—
—
—
100
—
—
—
—
2,460
2 ,187
950
480
160
920
—
480
800
640
—
160
740
—
—
—
—
630
—
630
630
150
—
630
630
—
630
630
—
—
—
—
260
310
—
1601)
280
—
—
160
—
—
100
—
—
—
—
—
2,447
940
—
790
910
150
—
790
630
—
730
630
—
—
—
—
6,680
1,110
7,790
6,747
1,270
8,017
1) Includes compensation for work relating to investments, modularization and quality.
ELECTROLUX ANNUAL REPORT 2020
72 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 27
Compensation to the Board of Directors
The Annual General Meeting (AGM) determines the compensation to the
Board of Directors for a period of one year until the next AGM. The com-
pensation is distributed between the Chairman, other Board Members and
remuneration for committee work. The Board decides the distribution of the
committee fee between the committee members. Compensation is paid out
in advance each quarter. Compensation paid in 2020 refers to one fourth of
the compensation authorized by the AGM in 2019 and three fourths of the
compensation authorized by the AGM in 2020. Total compensation paid in
cash in 2020 amounted to SEK 7.8m, of which SEK 6.7m referred to ordinary
compensation and SEK 1.1m to committee work.
Remuneration Committee
For information on the Remuneration Committee, see the Corporate
Governance Report on page 107.
Remuneration guidelines for Group Management
The current remuneration guidelines were approved by the AGM in 2020.
The guidelines apply until the AGM 2024 and are described below. The
detailed guidelines can be found on page 32 in the Annual Report.
Electrolux has a clear strategy to deliver profitable growth and create
shareholder value. A prerequisite for the successful implementation of the
Company’s business strategy and safeguarding of its long-term interests,
including its sustainability, is that the Company is able to recruit and retain
qualified personnel. To this end, it is necessary that the Company offers
competitive remuneration in relation to the country or region of employ-
ment of each Group Management member. These guidelines enable the
Company to offer the Group Management a competitive total remunera-
tion. The total remuneration for the Group Management shall be in line with
market practice and may comprise the following components: fixed com-
pensation, variable compensation, pension benefits and other benefits.
Following the ‘pay for performance’ principle, variable compensation shall
represent a significant portion of the total compensation opportunity for
Group Management. Variable compensation shall always be measured
against pre-defined targets and have a maximum above which no pay-
out shall be made. Variable compensation shall mainly relate to financial
performance targets. Non-financial targets may also be used in order to
strengthen the focus on delivering on the Company’s business strategy and
long-term interests, including its sustainability. The targets shall be specific,
clear, measurable and time bound and be determined by the Board of
Directors.
Since 2004, Electrolux has offered long-term performance share pro-
grams for senior managers of the Group. The alignment of Electrolux top
management incentives with the interest of shareholders is a longstand-
ing priority of the Board of Directors. Ownership of Electrolux shares by
the Group’s CEO and other Group Management members is an important
measure to strengthen this alignment.
Thus the Board recommends that the CEO shall build up a personal hold-
ing of B-shares in Electrolux representing a value of one gross annual base
salary and for Group Management members to build up a personal holding
of B-shares in Electrolux representing a value of 50% of one gross annual
base salary.
Remuneration and terms of employment for the President in 2020
The remuneration package for the President comprises fixed salary,
variable salary based on annual targets, a long-term performance-
share program and other benefits such as pension and insurance.
For the President, the annualized base salary for 2020 has been set at
SEK 11.5m.
The variable salary is based on annual financial and non-financial tar-
gets for the Group. Each year, a performance range is determined with a
minimum and a maximum. If the performance outcome for the year is below
or equal to the minimum level, no pay-out will be made. If the performance
outcome is at or above the maximum, pay-out is capped at 100% of the
annualized base salary. If the performance outcome is between minimum
and maximum, the pay-out shall be determined on a linear basis.
The President participates in the Group’s long-term performance based
share programs. For further information on these programs, see below.
The notice period for the company is 12 months, and for the President
6 months. The President is entitled to 12 months severance pay based on
base salary with deduction for other income during the 12 months sever-
ance period. Severance pay is applicable if the employment is terminated
by the company. It is also applicable if the employment is terminated by the
President provided serious breach of contract on the company’s behalf or
if there has been a major change in ownership structure in combination with
changes in management and changed individual accountability.
Pensions for the President
The President is covered by the collectively agreed ITP plan, the alternative
rule of the plan, and Electrolux Pension Plan for CEO. The Electrolux Pension
Plan for CEO is a defined contribution plan. The employer contribution to
the plan for the President is equivalent to 35% of annual base salary, which
also includes the contributions for the benefits of the ITP-plan, alternative
ITP and any insurable supplementary disability and survivor’s pension. In
addition, the Company provides a disability pension of maximum SEK 1.2m
per year if long term disability occurs. The retirement age for the President
is 65.
The capital value of pension commitments for the President in 2020, prior
Presidents, and survivors is SEK 206m (221), whereof SEK 36m (30) relates to
the current President.
Remuneration and terms of employment for other
members of Group Management in 2020
Like the President, other members of Group Management receive a remu-
neration package that comprises fixed salary, variable salary based on
annual targets, long-term performance-share programs and other benefits
such as pensions and insurance.
Base salary is revised annually per January 1. The average base-salary
increase for members of Group Management in 2020 was 5.0% (2.93).
Variable salary in 2020 is based on financial and non-financial targets
on business area and Group level. Variable salary for business area heads
and heads of Group Operations and Consumer Experience varies between
a minimum (no pay-out) and a maximum of 100% of annual base salary,
which is also the cap. Group Management members in the USA have a
maximum of up to 150% of annual base salary.
Group Management members that are Group staff heads receive vari-
able salary that varies between a minimum (no pay out) and a -maximum
of 80%, which is also the cap.
The members of Group Management participate in the Group’s long-
term performance based share programs. For further information on these
programs, see below.
The notice period for Group Management members employed in
Sweden is 12 months’ for the company and 6 months for the employee.
Certain members of Group Management are entitled to 12 months’ sever-
ance pay based on base salary with deduction for other income during the
12 months severance period. Severance pay is applicable if the employ-
ment is terminated by the company. It is also applicable if the employment
is terminated by the Group Management member provided serious breach
of contract on the company’s behalf or if there has been a major change
in ownership structure in combination with changes in management and
changed individual accountability.
For members of Group Management employed outside of Sweden,
varying terms of employment and benefits, such as company car, may
apply depending upon the country of employment.
Pensions for other members of Group Management
Group Management members employed in Sweden as from 2012 receive
a pension entitlement where the aggregated contribution is 35% of annual
base salary. The retirement age is 65 years.
Group Management members employed in Sweden before 2012 are
covered by the Alternative ITP plan, as well as a supplementary plan.
The Alternative ITP plan is a defined contribution plan where the
contribution increases with age. The contribution is between 20 and 40 %
of pensionable salary, between 7.5 and 30 income base amounts. The con-
tribution to the supplementary plan is 35% of pensionable salary above 20
income base amounts. Accrued capital is subject to a real rate of return of
3.5% per year. The retirement age (60) for one member employed prior to
2012 has been amended. The member’s employment and pension entitle-
ment is continued post age 60.
For members of Group Management employed outside of Sweden,
varying pension terms and conditions apply, depending upon the country
of employment.
Share-based compensation
Over the years, Electrolux has implemented several long-term incentive
programs (LTI) for senior managers. These programs are intended to
attract, motivate, and retain the participating managers by providing long-
term incentives through benefits linked to the company’s share price. They
have been designed to align management incentives with shareholder
interests.
For Electrolux, the share-based compensation programs are classified
as equity settled transactions, and the cost of the granted instrument’s fair
value at grant date is recognized over the vesting period which is 3.0 years
(2.7 for 2019 and 2018 programs). At each balance sheet date, the Group
revises the estimates to the number of shares that are expected to vest.
ELECTROLUX ANNUAL REPORT 2020
Notes 73
All amounts in SEKm unless otherwise stated
Cont. Note 27
Electrolux recognizes the impact of the revision to original estimates, if any,
in the income statement, with a corresponding adjustment to equity.
In addition, the Group provides for employer contributions expected to
be paid in connection with the share-based compensation programs. The
costs are charged to the income statement over the vesting period. The
provision is periodically revalued based on the fair value of the instruments
at each closing date.
Performance-share programs 2018, 2019 and 2020
The Extraordinary General Meeting on November 3, 2020, approved a
long-term incentive program for 2020. The program is in line with the Group’s
principles for remuneration based on performance, and is an integral part
of the total compensation for Group Management and other senior man-
agers. Electrolux shareholders benefit from this program since it facilitates
recruitment and retention of competent executives and aligns manage-
ment interest with shareholder interest as the program drives executive
shareholding and the participants are more aligned with the long-term
strategy of the company. The General Meetings of Electrolux has also
approved long-term incentive programs for 2018 and 2019.
The allocation of shares in the 2018 and 2019 programs is determined by
the position level and the outcome of three financial objectives; (1) earnings
per share, (2) return on net assets and (3) organic sales growth (adjusted
sales growth as from 2018). Performance outcome of the three financial
objectives was determined by the Board after the expiry of the one-year
performance period. The allocation of shares in the 2020 program is deter-
mined by the position level and the outcome of three objectives; (1) earn-
ings per share, (2) return on net assets and (3) CO2 reduction. Performance
outcome of (1) and (2) is determined by the Board after the expiry of the
one-year performance period and (3) after the expiry of the three-year
performance period.
For the 2018, 2019 and 2020 programs allocation is linear from minimum
to maximum. There is no allocation if the minimum level is not reached. If the
maximum is reached, 100% of shares will be allocated. Should the achieve-
ment of the objectives be below the maximum but above the minimum, a
proportionate allocation will be made. The shares will be allocated after the
three-year period free of charge.
If a participant’s employment is terminated during the three-year pro-
gram period, the participant will be excluded from the program and will
not receive any shares or other benefits under the program. However, in
certain circumstances, including for example a participant’s death, disabil-
ity, retirement or the divestiture of the participant’s employing company, a
participant could be entitled to reduced benefits under the program.
Each of the 2018, 2019 and 2020 program covers 253 to 282 senior man-
agers and key employees in almost 30 countries. Participants in the 2020
program comprise six groups, i.e., the President, other members of Group
Management, and four groups of other senior managers. All programs
comprise Class B shares.
The performance outcome for the financial targets in the share program
for 2020 was 100%. The outcome of the CO2 target in the share program
for 2020 will be determined after the expiry of the three year performance
period.
For 2020, LTI programs resulted in a cost of SEK 65m (including a cost of
SEK 13m in employer contribution) compared to a cost of SEK 77m in 2019
(including a cost of SEK 19m in employer contribution). The total provision
for employer contribution in the balance sheet amounted to SEK 17m (53).
Repurchased shares for LTI programs
The Annual General Meeting in 2019 resolved that the company shall be
entitled to sell B shares in the company for the purpose of covering costs,
including social security charges, that may arise as a result of the 2017 pro-
gram, but this mandate has not been used by the company.
Allocation of shares for the 2017 program
The 2017 performance-share program met 90% of the maximum performance
and performance shares were allocated during 2020 to the partici pants
according to the terms and conditions of the 2017 share program.
Remuneration to Group Management
’000 SEK unless
otherwise stated
Annual
fixed
salary1)
Variable
salary2)
Long-
term PSP
(cost)3)
Other
remuner-
ation4)
Total
pension
contri-
bution
Social
contri-
bution
Annual
fixed
salary1)
Variable
salary2)
Long-
term PSP
(cost)3)
Other
remuner-
ation4)
Total
pension
contri-
bution
Social
contri-
bution
President and CEO
11,553
10,378
4,151
9
3,993
4,328
11,591
2,213
5,676
1,911
3,993
4,942
2020
2019
Other members
of Group
Management5)
Total
41,129
52,682
31,959
42,337
9,832
13,983
12,757
12,766
12,117
16,110
11,178
15,506
43,994
55,585
11,180
13,393
17,057
22,733
5,725
7,636
13,235
17,228
12,327
17,269
1) The annual fixed salary includes vacation salary, paid vacation days and salary deductions for company car.
2) For 2020: variable salary earned 2020 and to be paid in 2021, and for 2019: variable salary earned 2019 and paid in 2020.
3) Cost for share-based incentive programs are accounted for according to IFRS 2, Share-based payments. If the expected cost of the program is reduced,
the previous recorded cost is reversed and an income is recorded in the income statement. The cost includes social contribution cost for the program.
4) Includes allowances and other benefits such as gross-up of tax, housing and company car, severance pay, and costs for extraordinary arrangements.
5) Other members of Group Management comprised of 9 people at the end of 2020, and of 10 people at the end of 2019. 2019 numbers have been adjusted for discontinued operations.
Number of potential shares per participant, per category and year
Group 1, President and CEO
Group 2, other members of Group Management
Group 3
Group 4
Group 5
Group 6
Maximum number of B shares1)
Maximum value, SEK2)
2020
63,262
19,211
11,424
6,716
4,830
3,274
2019
53,543
17,928
11,189
6,132
4,297
2,967
2018
2020
2019
2018
47,605 11,693,460 11,408,250 11,130,000
17,032
10,032
5,126
3,728
2,444
3,551,120
3,820,000
3,982,000
2,111,712
2,384,000
2,345,000
1,241,534
1,306,000
1,198,000
892,922
605,219
916,000
632,000
871,000
571,000
1) The maximum performance value for the participant in Group 1 will be 100 per cent, for participants in Group 2, 90 per cent, for participants in Group 3, 80 per cent, for participants in Group 4,
60 per cent, for participants in Group 5, 50 per cent and for participants in Group 6, 40 per cent of the participants annual base salary. At maximum performance the aggregated value is con-
verted to the average number of shares and average value per participant in respective category. The calculation is based on a share price of SEK 233.80 for 2018, SEK 213.07 for 2019, and SEK
184,84 for 2020 which is the average closing price of the Electrolux Class B share on the Nasdaq Stockholm during a period of ten trading days before the day participants were invited to par-
ticipate in the program, adjusted for net present value of dividends for the period until shares are allocated.
2) The share allocation for the 2018 program will be at 1.5% of maximum. For the 2019 program there will be no allocation as the outcome was 0. For the 2020 program the outcome of the financial
targets was 100% resulting in 1,140,782 shares, 285,196 shares are still subject to the CO2 reduction target. Decision on final outcome and allocation of shares under the 2020 program will be
made after the expiry of the three year performance period for the CO2 reduction target.
Performance-share program 2020
CO2 Reduction, %1)
Earnings per share, SEK
Return on net assets, %
Total allocation
1) Measured over 2020 – 2022, outcome will be presented in the 2022 annual report.
2) Including adjustments for acquisitions and divestments.
ELECTROLUX ANNUAL REPORT 2020
Financial objectives
Allocation of shares
Minimum
Maximum
Actual
Outcome, % Weight, % Allocation, %
0
9.0
12.0
100
12.5
20.0
TBD
13.92)
22.72)
TBD
100
100
20
60
20
TBD
60
20
80
74 Notes
All amounts in SEKm unless otherwise stated
Note 28 Fees to auditors
At the 2020 Annual General Meeting Deloitte was appointed auditor for the period until the end of the 2021 Annual General Meeting.
Deloitte
Audit fees1)
Audit-related fees2)
Tax fees3)
All other fees4)
Total fees to Deloitte5)
Audit fees to other audit firms
Total fees to auditors
Group
Parent Company
2020
2019
2020
2019
63
2
4
0
69
0
69
47
10
1
1
59
—
59
10
0
—
—
10
—
10
9
9
0
1
19
—
19
1) Audit fees consist of fees for the annual audit-services engagement and other audit services, which are those services that only the external auditors reasonably can provide, and include
the Group audit; statutory audits; comfort letters and consents; and attest services.
2) Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit of the accounts and annual reports of the Group and group
companies traditionally performed by the external auditors, and include consultations concerning financial accounting and reporting standards; internal control reviews as well as review of
interim reports.
3) Tax fees include for example tax compliance and tax consultation services.
4) All other fees include fees for transaction support services, financial advisory and other services.
5) Of audit-related fees, SEK 0m pertains to Deloitte Sweden, of tax fees, no amount pertains to Deloitte Sweden and of all other fees, no amount pertains to Deloitte Sweden.
Note 29 Shares and participations
Investments in associated companies
Electrolux participation in Gångaren 13 Holding AB, Sweden, remained
unchanged during the year. Gångaren 13 Holding AB is a real estate
company owning the corporate head office in Sweden.
The holdings in the South African associated companies SYR Africa
and Llitha Solar remained unchanged during the year. SYR Africa supplies
Electrolux with valves and has Electrolux as its sole customer. SYR Africa
is currently not trading. Llitha Solar carry out marginal business activities.
The holdings in Next-Tech BVBA/SPRL, Belgium, remained unchanged
during the year. Next-Tech designs and sells software and hardware solu-
tions for domestic kitchen retailers.
In August 2020 Electrolux acquired the remaining 60% of the Chinese
company Guangdong De Yi Jie Appliances Co., LTD. The company sells AEG
household appliances.
All associated companies are unlisted.
Investments in associated companies
Company
Gångaren 13 Holding AB, Sweden
SYR Africa (Pty), South Africa
Llitha Solar (Pty) LTD, South Africa
Next-Tech BVBA/SPRL, Belgium
Guangdong De Yi Jie Appliances Co., LTD, China
Vitality Ventures Group, Hong Kong
Tradeplace B.V., The Netherlands
Total
2020
2019
Holding, %
Carrying
amount
Net
income1)
Holding, %
Carrying
amount
Net
income1)
50
50
49
49
n/a
22
20
201
—
22
44
n/a
7
0
274
15
—
0
–50
–5
–4
0
–44
50
50
49
49
40
22
20
201
53
4
98
56
12
0
424
16
2
1
–14
–22
—
0
–17
1) Represents the Group’s share of net income and is reported in the line Other operating income and expenses in the consolidated statement of comprehensive income. Regarding Guangdong
De Yi Jie Appliances Co.,LTD net income refers to the Group's share up until August 2020.
ELECTROLUX ANNUAL REPORT 2020
Cont. Note 29
Group companies
The following table lists the major companies included in the Electrolux Group. A detailed specification of Group companies has been submitted to the
Swedish Companies Registration Office and is available upon request from AB Electrolux Investor Relations.
Notes 75
All amounts in SEKm unless otherwise stated
Subsidiaries
Major Group companies
Argentina
Australia
Austria
Belgium
Brazil
Canada
Chile
China
Denmark
Egypt
Finland
France
Germany
Hungary
Italy
Mexico
Electrolux Argentina S.A.
Electrolux Home Products Pty. Ltd
Electrolux Austria GmbH
Electrolux Home Products Corporation N.V.
Electrolux do Brasil S.A.
Electrolux Canada Corp.
Electrolux de Chile S.A.
Electrolux (Hangzhou) Domestic Appliances Co. Ltd
Electrolux (China) Home Appliance Co. Ltd
Guangdong De Yi Jie Appliances Co., Ltd
Electrolux Home Products Denmark A/S
Electrolux Egypt for Home Appliances S.A.E.
Oy Electrolux Ab
Electrolux France SAS
Electrolux Home Products France SAS
Electrolux Deutschland GmbH
Electrolux Rothenburg GmbH Factory and Development
Electrolux Lehel Kft
Electrolux Appliances S.p.A.
Electrolux Italia S.p.A.
Electrolux de Mexico, S.A. de C.V.
The Netherlands
Electrolux Associated Company B.V.
Norway
Poland
Romania
Russia
Singapore
Spain
Sweden
Switzerland
Thailand
Ukraine
United Kingdom
USA
Electrolux Home Products (Nederland) B.V.
Electrolux Home Products Norway AS
Electrolux Poland Spolka z.o.o.
SC Electrolux Romania SA
LLC Electrolux Rus
Electrolux SEA Pte Ltd
Electrolux España, S.A.U.
Electrolux HemProdukter AB
Electrolux Appliances AB
Electrolux AG
Electrolux Thailand Co. Ltd.
DC Electrolux LLC
Electrolux Plc
Electrolux Home Products, Inc.
Electrolux North America, Inc.
Note 30 Transactions with related parties
Transactions with associated companies
Net sales to associates
Purchases from associates
Receivables on associates
Payables to associates
Loans to associates
Group
Parent company
2020
2019
2020
2019
67
14
1
2
12
27
122
12
35
15
56
—
—
2
12
11
—
3
3
—
ELECTROLUX ANNUAL REPORT 2020
Holding, %
100
100
100
100
100
100
99.88
100
100
100
100
99.97
100
100
100
100
100
100
100
100
100
100
100
100
100
99.83
100
100
100
100
100
100
100
100
100
100
100
The Group’s related parties are its associated companies, joint ventures,
the Parent company’s largest shareholder Investor AB, Board members of
AB Electrolux and Group Management members. Commercial terms and
market prices apply to all transactions with related parties.
Investment details in associated companies are disclosed in Note 29.
Transactions and balances with associated companies are disclosed in
the table to the left.
Investor AB controls approximately 28% (28) of the voting rights in AB
Electrolux. The Group has not had any transactions with Investor AB dur-
ing the year, other than dividends declared, and there are no outstanding
balances with Investor AB. Investor AB has controlling or significant influ-
ence over companies with which Electrolux may have transactions within
the normal course of business. Commercial terms and market prices apply
to any such transactions.
Remuneration to members of the Board of Directors and Group manage-
ment are disclosed in Note 27.
76 Notes
All amounts in SEKm unless otherwise stated
Note 31 Definitions
This report includes financial measures as required by the financial report-
ing framework applicable to Electrolux, which is based on IFRS. In addition,
there are other measures and indicators that are used to follow up, analyze
and manage the business and to provide Electrolux stakeholders with use-
ful financial information on the Group’s financial position, performance and
development in a consistent way. These other measures and indicators are
considered essential in supporting the Group’s financial goals to achieve
a combination of continuous growth, high profitability, a stable cash flow,
and an optimal capital base to generate a high total return for Electrolux
shareholders. Thus, there are measures related to growth, profitability and
capital, share-based measures and capital indicators which are considered
relevant to present on a continuous basis. Below is a list of definitions of all
measures and indicators used, referred to and presented in this report.
Computation of average amounts and annualized
income statement measures
In computation of key ratios where averages of capital balances are related
to income statement measures, the average capital balances are based
on the opening balance and all quarter-end closing balances included in
the reporting period, and the income statement measures are annualized,
translated at average rates for the period. In computation of key ratios
where end-of-period capital balances are related to income statement
measures, the latter are annualized, translated at end-of-period exchange
rates. Adjustments are made for acquired and divested operations.
Growth measures
Change in net sales
Current year net sales for the period less previous year net sales for the
period as a percentage of previous year net sales for the period.
Sales growth
Change in net sales adjusted for currency translation effects.
Organic growth
Change in net sales, adjusted for changes in exchange rates,
acquisitions and divestments.
Acquisitions
Change in net sales, adjusted for organic growth, changes in exchange
rates and divestments. The impact from acquisitions relates to net sales
reported by acquired operations within 12 months after the acquisition
date.
Divestments
Change in net sales, adjusted for organic growth, changes in exchange
rates and acquisitions. The impact from divestments relates to net sales
reported by the divested operations within 12 months before the divestment
date.
Profitability measures
EBITA
Operating income excluding amortization of intangible assets.
EBITA margin
EBITA expressed as a percentage of net sales.
Operating margin (EBIT margin)
Operating income (EBIT) expressed as a percentage of net sales.
Operating margin (EBIT margin) excluding non-recurring items
Operating income (EBIT) excluding non-recurring items, expressed as
a percentage of net sales.
Return on net assets
Operating income (annualized) expressed as a percentage of
average net assets.
Return on equity
Income for the period (annualized) expressed as a percentage
of average total equity.
Capital measures
Net debt/equity ratio
Net debt in relation to total equity.
Equity/assets ratio
Total equity as a percentage of total assets less liquid funds.
Capital turnover-rate
Net sales (annualized) divided by average net assets.
Share-based measures
Earnings per share, Basic
Income for the period attributable to equity holders of the Parent
Company divided by the average number of shares excluding shares
held by Electrolux.
Earnings per share, Diluted
Income for the period attributable to equity holders of the Parent Company
divided by the average number of shares after dilution, excluding shares
held by Electrolux.
Equity per share
Total equity divided by total number of shares excluding shares held
by Electrolux.
Capital indicators
Liquid funds
Cash and cash equivalents, short-term investments, financial derivative
assets1) and prepaid interest expenses and accrued interest income1).
Liquid funds in relation to net sales
The sum of liquid funds and non-utilized credit facilities divided by annualized
net sales.
Operating working capital
Inventories and trade receivables less accounts payable.
Working capital
Total current assets exclusive of liquid funds, less non-current other provisions
and total current liabilities exclusive of total short-term borrowings.
Net assets
Total assets exclusive of liquid funds and pension plan assets, less deferred
tax liabilities, non-current other provisions and total current liabilities
exclusive of total short-term borrowings.
Total borrowings
Long-term borrowings and short-term borrowings, financial derivative
liabilities1), accrued interest expenses and prepaid interest income1).
Total short-term borrowings
Short-term borrowings, financial derivative liabilities1), accrued interest
expenses and prepaid interest income1).
Interest-bearing liabilities
Long-term borrowings and short-term borrowings exclusive of liabilities
related to trade receivables with recourse1).
Financial net debt
Total borrowings less liquid funds.
Net provision for post-employment benefits
Provisions for post-employment benefits less pension plan assets.
Net debt
Financial net debt, lease liabilities and net provision for post-employment
benefits.
Other measures
Operating cash flow after investments
Cash flow from operations and investments adjusted for financial items
paid, taxes paid and acquisitions/divestments of operations.
Interest coverage ratio
Operating income plus interest income in relation to total interest expenses.
Non-recurring items
Material profit or loss items in operating income2) which are relevant for
understanding the financial performance when comparing income for the
current period with previous periods.
1) See table Net debt on page 58.
2) See Note 7 for more information.
ELECTROLUX ANNUAL REPORT 2020
Notes 77
All amounts in SEKm unless otherwise stated
Note 32 Proposed distribution of earnings
The Board of Directors proposes that income for the period and retained earnings be distributed as follows:
A dividend to the shareholders of SEK 8.00 per share1), totaling
To be carried forward
Total
1) Calculated on the number of outstanding shares as per February 17, 2021.
‘000 SEK
19,452,947
2,299,180
17,153,767
19,452,947
The Board of Directors has proposed that the Annual General Meeting 2021
resolves on a dividend to the shareholders of SEK 8.00 per share to be paid
in two installments. The record date for the first installment of SEK 4.00 per
share is proposed to be Monday March 29, 2021 and the record date for
the second installment of SEK 4.00 per share is proposed to be Wednesday
September 29, 2021. On account hereof, the Board of Directors hereby
makes the following statement according to Chapter 18 Section 4 of the
Swedish Companies Act.
The Board of Directors finds that there will be full coverage for the
restricted equity of the Company, after distribution of the proposed dividend.
It is the Board of Directors’ assessment that after distribution of the pro-
posed dividend, the equity of the Company and the Group will be sufficient
with respect to the kind, extent, and risks of the operations. The Board of
Directors has hereby considered, among other things, the Company’s and
the Group’s historical development, the budgeted development and the
state of the market.
If financial instruments currently valued at fair value in accordance with
Chapter 4 Section 14a of the Swedish Annual Accounts Act instead had
been valued according to the lower of cost or net realizable value, including
cumulative revaluation of external shares, the equity of the company would
decrease by SEK 17,081 thousand.
After the proposed dividend, the financial strength of the Company and
the Group is assessed to continue to be good in relation to the industry in
which the Group is operating. The dividend will not affect the ability of the
Company and the Group to comply with its payment obligations. The Board
of Directors finds that the Company and the Group are well prepared to
handle any changes in respect of liquidity, as well as unexpected events.
The Board of Directors is of the opinion that the Company and the Group
have the ability to take future business risks and also cope with potential
losses. The proposed dividend will not negatively affect the Company’s and
the Group’s ability to make further commercially motivated investments in
accordance with the strategy of the Board of Directors.
The Board of Directors declare that the consolidated financial state-
ments have been prepared in accordance with IFRS as adopted by the
EU and give a true and fair view of the Group’s financial position and results
of operations. The financial statements of the Parent Company have been
prepared in accordance with generally accepted accounting principles
in Sweden and give a true and fair view of the Parent Company’s financial
position and results of operations.
The statutory Administration Report of the Group and the Parent
Company provides a fair review of the development of the Group’s and the
Parent Company’s operations, financial position and results of operations
and describes material risks and uncertainties facing the Parent Company
and the companies included in the Group.
Stockholm, February 17, 2021
AB ELECTROLUX (PUBL)
556009–4178
Staffan Bohman
Chairman of the Board of Directors
Jonas Samuelson
Board member and President
and Chief Executive Officer
Petra Hedengran
Board member
Henrik Henriksson
Board member
Ulla Litzén
Board member
Karin Overbeck
Board member
Fredrik Persson
Board member
David Porter
Board member
Kai Wärn
Board member
Mina Billing
Board member,
employee representative
Viveca Brinkenfeldt Lever
Board member,
employee representative
Peter Ferm
Board member,
employee representative
Our audit report was submitted on February 17, 2021
Deloitte AB
Jan Berntsson
Authorized Public Accountant
ELECTROLUX ANNUAL REPORT 2020
78 Auditor's report
Auditor's report
To the general meeting of the shareholders of AB Electrolux (publ)
corporate identity number 556009-4178
Report on the annual accounts and consolidated accounts
Opinions
We have audited the annual accounts and consolidated
accounts of AB Electrolux (publ) for the year 2020. The annual
accounts and consolidated accounts of the company are
included on pages 14-77 in this document.
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly, in
all material respects, the financial position of the parent com-
pany as of 31 December 2020 and its financial performance
and cash flow for the year then ended in accordance with the
Annual Accounts Act. The consolidated accounts have been
prepared in accordance with the Annual Accounts Act and
present fairly, in all material respects, the financial position of the
group as of 31 December 2020 and their financial performance
and cash flow for the year then ended in accordance with
International Financial Reporting Standards (IFRS), as adopted
by the EU, and the Annual Accounts Act. The statutory admin-
istration report is consistent with the other parts of the annual
accounts and consolidated accounts.
We therefore recommend that the general meeting of share-
holders adopts the income statement and balance sheet for the
parent company and the group.
Our opinions in this report on the annual accounts and
consolidated accounts are consistent with the content of the
additional report that has been submitted to the parent com-
pany's audit committee in accordance with the Audit Regulation
(537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International
Standards on Auditing (ISA) and generally accepted auditing
standards in Sweden. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities section.
We are independent of the parent company and the group in
accordance with professional ethics for accountants in Swe-
den and have otherwise fulfilled our ethical responsibilities in
accordance with these requirements. This includes that, based
on the best of our knowledge and belief, no prohibited services
referred to in the Audit Regulation (537/2014) Article 5.1 have
been provided to the audited company or, where applicable, its
parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is suf-
ficient and appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our audit of
the annual accounts and consolidated accounts of the current
period. These matters were addressed in the context of our audit
of, and in forming our opinion thereon, the annual accounts
and consolidated accounts as a whole, but we do not provide a
separate opinion on these matters.
Revenue Recognition
Revenues in the group consists primarily of sales of appliances
to retailers. Net sales in the group consist of a large number of
transactions and amounts, for 2020 to 115,960 MSEK. Revenue
recognition cut off constitutes a key audit matter in our audit.
Accounting principles and disclosures related to revenue
recognition can be found in Note 4.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for revenue
recognition and its compliance with IFRS,
• audit of the internal control environment regarding revenue
recognition and test of identified key controls, including IT
controls
• analytical procedures, and
• detailed testing of sales transactions on a sample basis to
confirm proper revenue cut off.
Valuation of trade receivables
The group has significant amounts of trade receivables. There is
a certain concentration of credit risk exposure in certain mar-
kets and towards large customers. Procedures for assessing
customers’ ability to pay together with appropriate accounting
principles to recognize provisions for bad debt constitutes a key
audit matter in our audit.
Accounting principles and disclosures related to trade
receivables can be found in Note 1 and 17.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for recognizing
bad debt for compliance with IFRS,
• audit of the internal control environment regarding valuation
of trade receivables and test of identified key controls,
• detailed testing on a sample basis against customer state-
ments alternatively cash receipts or shipping documents to
confirm trade receivables, and
• evaluation of aging of trade receivables and management’s
estimates of provisions for bad debt.
Valuation of inventory
The group carries significant inventories of goods held by
several production and sales units in many countries. Valuation
of inventory and provisions for obsolescence requires clear
policies and is subject to management’s estimates. Processes
for valuation of inventory and making appropriate provisions for
obsolescence constitutes a key audit matter in our audit.
Accounting principles and disclosures related to inventory
can be found in Note 15.
ELECTROLUX ANNUAL REPORT 2020
Auditor's report 79
Responsibilities of the Board of Directors and
the Managing Director
The Board of Directors and the Managing Director are respon-
sible for the preparation of the annual accounts and con-
solidated accounts and that they give a fair presentation in
accordance with the Annual Accounts Act and, concerning the
consolidated accounts, in accordance with IFRS as adopted
by the EU. The Board of Directors and the Managing Director
are also responsible for such internal control as they determine
is necessary to enable the preparation of annual accounts and
consolidated accounts that are free from material misstate-
ment, whether due to fraud or error.
In preparing the annual accounts and consolidated
accounts, the Board of Directors and the Managing Director
are responsible for the assessment of the company’s and the
group’s ability to continue as a going concern. They disclose,
as applicable, matters related to going concern and using the
going concern basis of accounting. The going concern basis
of accounting is however not applied if the Board of Directors
and the Managing Director intends to liquidate the company, to
cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board
of Director’s responsibilities and tasks in general, among other
things oversee the company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about
whether the annual accounts and consolidated accounts as
a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our
opinions. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with
ISAs and generally accepted auditing standards in Sweden will
always detect a material misstatement when it exists. Misstate-
ments can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these annual accounts and consolidated accounts.
An additional description of our responsibility for the audit of
the annual accounts and the consolidated accounts is located
at the Swedish Inspectorate of Auditors’ web page:
www.revisorsinspektionen. se/revisornsansvar. This description
is a part of the auditor’s report.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for inventory in
compliance with IFRS,
• audit of the internal control environment regarding valuation
of inventory and test of identified key controls including ITsys-
tems,
• observations of physical inventory counts,
• on a sample basis testing valuation of inventory, and
• evaluating management’s estimates related to provisions for
obsolescence.
Accounting for legal proceedings
Electrolux is involved in several legal proceedings which could
have a significant impact on the group’s result and financial
position. Processes to assess, evaluate and account for legal
proceedings constitutes a key audit matter in our audit.
Further information on the group’s legal proceedings and
management of these can be found in Note 25.
Our audit procedures
Our audit procedures included, but were not limited to:
• quarterly meetings with the Group Head of Legal regarding
significant ongoing legal proceedings,
• obtaining legal statements from a selection of the group’s
external lawyers, and
• evaluating management’s judgments and estimates related to
legal proceedings and the accounting for these.
Other information than the annual accounts and
consolidated accounts
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages
1–13 and 81–124. The Board of Directors and the Managing
Director are responsible for this other information.
Our opinion on the annual accounts and consolidated
accounts does not cover this other information and we do not
express any form of assurance conclusion regarding this other
information.
In connection with our audit of the annual accounts and
consolidated accounts, our responsibility is to read the informa-
tion identified above and consider whether the information is
materially inconsistent with the annual accounts and consoli-
dated accounts. In this procedure we also take into account our
knowledge otherwise obtained in the audit and assess whether
the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this informa-
tion, conclude that there is a material misstatement of this other
information, we are required to report that fact. We have noth-
ing to report in this regard.
ELECTROLUX ANNUAL REPORT 2020
80 Auditor's report
Report on other legal and regulatory requirements
Opinions
In addition to our audit of the annual accounts and consoli-
dated accounts, we have also audited the administration of the
Board of Directors and the Managing Director of AB Electrolux
(publ) for the year 2020 and the proposed appropriations of the
company’s profit or loss.
We recommend to the general meeting of shareholders that
the profit to be appropriated in accordance with the proposal in
the statutory administration report and that the members of the
Board of Directors and the Managing Director be discharged
from liability for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the
group in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained is suf-
ficient and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and
the Managing Director
The Board of Directors is responsible for the proposal for appro-
priations of the company’s profit or loss. At the proposal of a
dividend, this includes an assessment of whether the dividend
is justifiable considering the requirements which the company's
and the group’s type of operations, size and risks place on the
size of the parent company's and the group’s equity, consolida-
tion requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s
organization and the administration of the company’s affairs.
This includes among other things continuous assessment of the
company’s and the group’s financial situation and ensuring that
the company's organization is designed so that the account-
ing, management of assets and the company’s financial affairs
otherwise are controlled in a reassuring manner. The Managing
Director shall manage the ongoing administration according to
the Board of Directors’ guidelines and instructions and among
other matters take measures that are necessary to fulfill the
company’s accounting in accordance with law and handle the
management of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and
thereby our opinion about discharge from liability, is to obtain
audit evidence to assess with a reasonable degree of assurance
whether any member of the Board of Directors or the Managing
Director in any material respect:
• has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies
Act, the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropria-
tions of the company’s profit or loss, and thereby our opinion
about this, is to assess with reasonable degree of assurance
whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with gen-
erally accepted auditing standards in Sweden will always detect
actions or omissions that can give rise to liability to the com-
pany, or that the proposed appropriations of the company’s
profit or loss are not in accordance with the Companies Act.
An additional description of our responsibility for the audit
of the administration of the Board of Directors and the Manag-
ing Director is located at the Swedish Inspectorate of Auditors’
web page: www.revisorsinspektionen.se/revisornsansvar. This
description is a part of the auditor’s report.
Deloitte AB, was appointed auditor of AB Electrolux (publ) by
the general meeting of the shareholders on the 2020-03-31 and
has been the company’s auditor since 2018-04-05.
Stockholm, February 17, 2021
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and
the Swedish language original, the latter shall prevail.
ELECTROLUX ANNUAL REPORT 2020
82
Eleven-year review
sekm
Net sales and income
Net sales
Organic growth, %
Depreciation and amortization
Items affecting comparability 2)/ Non-recurring items 6)
Operating income
Income after financial items
Income for the period
Cash flow
Cash flow from operations
Cash flow from investments
of which capital expenditure in property, plant and equipment
Cash flow from operations and investments
Cash flow from operations and investments excluding acquisitions
and divestments of operations
Dividend, redemption and repurchase of shares
Capital expenditure in property, plant and equipment
as % of net sales
Margins 3)
Operating margin, %
Income after financial items as % of net sales
Financial position
Total assets
Net assets
Working capital
Trade receivables
Inventories
Accounts payable
Total equity
Interest-bearing liabilities
Provisions for post-employment benefits, net
Net debt
Data per share
Income for the period, SEK
Equity, SEK
Dividend, SEK4)
Trading price of B-shares at year-end, SEK
Key ratios
Return on equity, %
Return on net assets, %
Net assets as % of net sales 5)
Trade receivables as % of net sales 5)
Inventories as % of net sales 5)
Net debt/equity ratio
Interest coverage ratio
Dividend as % of total equity
Other data
Average number of employees
Salaries and remuneration
Number of shareholders
Average number of shares after buy-backs, million
Shares at year end after buy-backs, million
2010
2011
2012 1)
2013
2014
2015
2016
20171)
2018
20187)
2019
2020
5 years
10 years
Compound annual growth rate, %
106,326
101,598
109,994
109,151
112,143
123,511
121,093
120,771
124,129
115,463
118,981
115,960
–1.3
0.9
1.5
3,328
–1,064
5,430
5,306
3,997
7,680
–4,474
–3,221
3,206
3,199
–1,120
3.0
6.1
6.0
73,521
19,904
–5,902
19,346
11,130
17,283
20,613
12,096
0.2
3,173
–138
3,017
2,780
2,064
5,399
–10,049
–3,163
–4,650
906
–1,850
3.1
3.1
2.9
76,384
27,011
–5,180
19,226
11,957
18,490
20,644
14,206
–709
6,367
7.25
73
6.50
14.04
72
6.50
191.00
20.6
27.8
18.2
17.7
10.2
–0.03
12.64
9.0
51,544
12,678
57,200
284.6
284.7
5.5
3,251
–1,032
4,000
3,154
2,365
7,080
–4,702
–4,090
2,378
2,542
–1,868
3.7
4.6
3.8
75,194
25,890
–6,505
18,288
12,963
20,590
15,726
13,088
4,479
10,164
8.26
55
6.50
4.5
3,356
–2,475
1,580
904
672
4,455
–4,734
–3,535
–279
–74
–1,860
3.2
3.7
3.1
76,001
24,961
–5,800
19,441
12,154
20,607
14,308
14,905
2,980
10,653
2.35
50
6.50
109.70
170.50
168.50
10.4
13.7
23.8
17.0
10.5
0.31
5.84
9.0
52,916
13,137
58,800
284.7
284.7
14.4
14.8
22.5
15.9
11.3
0.65
2.72
11.8
59,478
13,785
51,800
285.9
286.1
4.4
5.8
21.8
17.0
10.6
0.74
2.11
13.0
60,754
13,521
51,500
286.2
286.2
1.1
3,671
–1,199
3,581
2,997
2,242
7,822
–3,759
–3,006
4,063
4,132
–1,861
2.7
3.2
2.7
85,688
26,099
–8,377
20,663
14,324
25,705
16,468
14,703
4,763
9,631
7.83
57.52
6.50
228.80
15.7
14.2
20.4
16.2
11.2
0.58
5.16
11.3
60,038
14,278
46,500
286.3
286.3
2.2
3,936
—
2,741
2,101
1,568
8,267
–3,403
–3,027
4,864
4,955
–1,870
2.5
2.2
1.7
83,471
21,412
–12,234
17,745
14,179
26,467
15,005
13,097
4,509
6,407
5.45
52.21
6.50
205.20
9.9
11.0
17.3
14.3
11.5
0.43
3.75
12.4
58,265
15,858
45,485
287.1
287.4
–1.1
3,934
—
6,274
5,581
4,493
10,165
–2,557
–2,830
7,608
7,432
–1,868
2.3
5.2
4.6
85,848
18,098
–14,966
19,408
13,418
28,283
17,738
10,202
4,169
360
15.64
61.72
7.50
226.30
29.4
29.9
14.2
15.2
10.5
0.02
3.75
10.5
55,400
15,886
48,939
287.4
287.4
–0.4
3,977
—
7,407
6,966
5,745
10,024
–8,200
–3,892
1,824
5,229
–2,155
3.2
6.1
5.8
89,542
20,678
–15,873
20,747
14,655
31,114
20,480
9,537
2,634
197
19.99
71.26
8.30
264.30
31.9
36.0
17.5
17.5
12.4
0.01
12.16
11.6
55,692
16,470
45,295
287.4
287.4
1.3
4,150
–1,343
5,310
4,887
3,805
8,046
–6,506
–4,650
1,540
2,149
–2,385
3.7
4.3
3.9
97,312
23,574
–16,848
21,482
16,750
34,443
21,749
9,982
3,814
1,825
13.24
75.67
8.50
187.10
18.2
22.7
19.0
17.3
13.5
0.08
9.05
11.2
54,419
17,363
49,870
287.4
287.4
–2,385
–2,443
1.2
3,981
–1,343
4,176
3,754
2,854
—
—
—
—
—
3.9
3.6
3.3
—
—
—
—
—
20,306
–17,077
19,824
15,451
32,996
9.93
—
8.50
187.10
—
20.2
17.5
17.1
13.4
—
—
—
51,253
15,829
49,870
287.4
287.4
–1.0
4,821
–1,344
3,189
2,456
1,820
7,314
–6,994
–5,320
321
348
4.5
2.7
2.1
106,808
26,172
–17,390
20,847
16,194
33,892
22,574
10,989
3,866
7,683
6.33
78.55
7.00
229.90
11.4
12.0
22.3
17.7
13.8
0.34
2.57
10.8
48,652
16,318
50,544
287.4
287.4
3.2
4,587
—
5,778
5,096
3,988
11,932
–5,115
–4,325
6,816
6,824
–2,012
3.7
5.0
4.4
99,604
20,265
–19,191
19,944
13,213
31,306
18,709
15,412
3,679
1,556
13.88
65.10
8.00
191.35
34.1
22.6
22.0
18.6
12.3
0.08
5.04
10.8
47,543
15,666
59,401
287.4
287.4
16.1
19.4
20.5
7.6
7.0
3.6
–1.1
2.4
–1.4
3.4
4.5
3.3
–4.0
–14.5
20.6
4.5
4.2
–1.4
–4.0
–0.2
5.5
0.6
–0.4
0.0
4.5
7.8
3.1
0.2
0.3
1.7
6.1
–1.0
2.5
–0.1
–1.0
2.1
0.0
–0.8
2.1
0.4
1) Amounts for 2012 have been restated where applicable as a consequence of the amended standard for pension accounting, IAS 19 Employee Benefits and 2017
as a consequence of the introduction of IFRS 15 Revenue from Contracts with Customers.
2) As of 2015 the accounting concept of Items affecting comparability is no longer in use. As from 2018, non-recurring items are presented, see definition in Note 31.
3) Items affecting comparability are excluded for the years 2009 to 2013. 2014 has been restated.
4) 2020: Proposed by the Board.
5) Annualized net sales, calculated at end of period exchange rates, 2019: 117,519 (restated 2018: 115,733).
6) For more information, see Note 7.
7) Certain amounts have been restated for discontinued operations as a consequence of the planned distribution of the Professional business area.
ELECTROLUX ANNUAL REPORT 2020
2010
2011
2012 1)
2013
2014
2015
2016
20171)
2018
20187)
2019
2020
5 years
10 years
Compound annual growth rate, %
106,326
101,598
109,994
109,151
112,143
123,511
121,093
120,771
124,129
115,463
118,981
115,960
–1.3
0.9
Eleven-year review 83
All amounts in SEKm unless otherwise stated
–0.4
3,977
—
7,407
6,966
5,745
10,024
–8,200
–3,892
1,824
5,229
–2,155
3.2
6.1
5.8
89,542
20,678
–15,873
20,747
14,655
31,114
20,480
9,537
2,634
197
19.99
71.26
8.30
264.30
31.9
36.0
17.5
17.5
12.4
0.01
12.16
11.6
55,692
16,470
45,295
287.4
287.4
1.3
4,150
–1,343
5,310
4,887
3,805
8,046
–6,506
–4,650
1,540
2,149
–2,385
3.7
4.3
3.9
97,312
23,574
–16,848
21,482
16,750
34,443
21,749
9,982
3,814
1,825
13.24
75.67
8.50
187.10
18.2
22.7
19.0
17.3
13.5
0.08
9.05
11.2
54,419
17,363
49,870
287.4
287.4
1.2
3,981
–1,343
4,176
3,754
2,854
—
—
—
—
—
–1.0
4,821
–1,344
3,189
2,456
1,820
7,314
–6,994
–5,320
321
348
–2,385
–2,443
3.9
3.6
3.3
—
20,306
–17,077
19,824
15,451
32,996
—
—
—
—
9.93
—
8.50
187.10
—
20.2
17.5
17.1
13.4
—
—
—
51,253
15,829
49,870
287.4
287.4
4.5
2.7
2.1
106,808
26,172
–17,390
20,847
16,194
33,892
22,574
10,989
3,866
7,683
6.33
78.55
7.00
229.90
11.4
12.0
22.3
17.7
13.8
0.34
2.57
10.8
48,652
16,318
50,544
287.4
287.4
3.2
4,587
—
5,778
5,096
3,988
11,932
–5,115
–4,325
6,816
6,824
–2,012
3.7
5.0
4.4
99,604
20,265
–19,191
19,944
13,213
31,306
18,709
15,412
3,679
1,556
13.88
65.10
8.00
191.35
34.1
22.6
22.0
18.6
12.3
0.08
5.04
10.8
47,543
15,666
59,401
287.4
287.4
2.2
3,936
—
2,741
2,101
1,568
8,267
–3,403
–3,027
4,864
4,955
–1,870
2.5
2.2
1.7
83,471
21,412
–12,234
17,745
14,179
26,467
15,005
13,097
4,509
6,407
5.45
52.21
6.50
205.20
9.9
11.0
17.3
14.3
11.5
0.43
3.75
12.4
58,265
15,858
45,485
287.1
287.4
–1.1
3,934
—
6,274
5,581
4,493
10,165
–2,557
–2,830
7,608
7,432
–1,868
2.3
5.2
4.6
85,848
18,098
–14,966
19,408
13,418
28,283
17,738
10,202
4,169
360
15.64
61.72
7.50
226.30
29.4
29.9
14.2
15.2
10.5
0.02
3.75
10.5
55,400
15,886
48,939
287.4
287.4
ELECTROLUX ANNUAL REPORT 2020
16.1
19.4
20.5
7.6
7.0
3.6
–1.1
2.4
–1.4
3.4
4.5
3.3
–4.0
–14.5
20.6
4.5
4.2
–1.4
–4.0
–0.2
5.5
0.6
–0.4
0.0
4.5
7.8
3.1
0.2
0.3
1.7
6.1
–1.0
2.5
–0.1
–1.0
2.1
0.0
–0.8
2.1
0.4
Depreciation and amortization
Items affecting comparability 2)/ Non-recurring items 6)
sekm
Net sales and income
Net sales
Organic growth, %
Operating income
Income after financial items
Income for the period
Cash flow
Cash flow from operations
Cash flow from investments
of which capital expenditure in property, plant and equipment
Cash flow from operations and investments
Cash flow from operations and investments excluding acquisitions
and divestments of operations
Dividend, redemption and repurchase of shares
Capital expenditure in property, plant and equipment
Income after financial items as % of net sales
as % of net sales
Margins 3)
Operating margin, %
Financial position
Total assets
Net assets
Working capital
Trade receivables
Inventories
Accounts payable
Total equity
Interest-bearing liabilities
Provisions for post-employment benefits, net
Net debt
Data per share
Equity, SEK
Dividend, SEK4)
Income for the period, SEK
Key ratios
Return on equity, %
Return on net assets, %
Net assets as % of net sales 5)
Trade receivables as % of net sales 5)
Inventories as % of net sales 5)
Net debt/equity ratio
Interest coverage ratio
Dividend as % of total equity
Other data
Average number of employees
Salaries and remuneration
Number of shareholders
Average number of shares after buy-backs, million
Shares at year end after buy-backs, million
1.5
3,328
–1,064
5,430
5,306
3,997
7,680
–4,474
–3,221
3,206
3,199
–1,120
3.0
6.1
6.0
73,521
19,904
–5,902
19,346
11,130
17,283
20,613
12,096
14.04
72
6.50
191.00
20.6
27.8
18.2
17.7
10.2
–0.03
12.64
9.0
51,544
12,678
57,200
284.6
284.7
0.2
3,173
–138
3,017
2,780
2,064
5,399
–10,049
–3,163
–4,650
906
–1,850
3.1
3.1
2.9
76,384
27,011
–5,180
19,226
11,957
18,490
20,644
14,206
7.25
73
6.50
10.4
13.7
23.8
17.0
10.5
0.31
5.84
9.0
5.5
3,251
–1,032
4,000
3,154
2,365
7,080
–4,702
–4,090
2,378
2,542
–1,868
3.7
4.6
3.8
75,194
25,890
–6,505
18,288
12,963
20,590
15,726
13,088
4,479
10,164
8.26
55
6.50
14.4
14.8
22.5
15.9
11.3
0.65
2.72
11.8
4.5
3,356
–2,475
1,580
904
672
4,455
–4,734
–3,535
–279
–74
–1,860
3.2
3.7
3.1
76,001
24,961
–5,800
19,441
12,154
20,607
14,308
14,905
2,980
10,653
2.35
50
6.50
4.4
5.8
21.8
17.0
10.6
0.74
2.11
13.0
52,916
13,137
58,800
284.7
284.7
59,478
13,785
51,800
285.9
286.1
60,754
13,521
51,500
286.2
286.2
–709
6,367
1.1
3,671
–1,199
3,581
2,997
2,242
7,822
–3,759
–3,006
4,063
4,132
–1,861
2.7
3.2
2.7
85,688
26,099
–8,377
20,663
14,324
25,705
16,468
14,703
4,763
9,631
7.83
57.52
6.50
228.80
15.7
14.2
20.4
16.2
11.2
0.58
5.16
11.3
60,038
14,278
46,500
286.3
286.3
Trading price of B-shares at year-end, SEK
109.70
170.50
168.50
1) Amounts for 2012 have been restated where applicable as a consequence of the amended standard for pension accounting, IAS 19 Employee Benefits and 2017
as a consequence of the introduction of IFRS 15 Revenue from Contracts with Customers.
2) As of 2015 the accounting concept of Items affecting comparability is no longer in use. As from 2018, non-recurring items are presented, see definition in Note 31.
3) Items affecting comparability are excluded for the years 2009 to 2013. 2014 has been restated.
5) Annualized net sales, calculated at end of period exchange rates, 2019: 117,519 (restated 2018: 115,733).
4) 2020: Proposed by the Board.
6) For more information, see Note 7.
7) Certain amounts have been restated for discontinued operations as a consequence of the planned distribution of the Professional business area.
84 Operations by business area yearly
All amounts in SEKm unless otherwise stated
Operations by business
area yearly
sekm
Europe
Net sales
Operating income
Margin, %
North America
Net sales
Operating income
Margin, %
Latin America
Net sales
Operating income
Margin, %
Asia-Pacific, Middle East and Africa
Net sales
Operating income
Margin, %
Other
2016
20171)
2018
20192)
20202)
39,097
2,794
7.1
44,914
2,657
5.9
16,384
–111
– 0.7
13,833
673
4.9
39,231
2,772
7.1
42,083
2,796
6.6
43,321
2,128
4.9
39,804
1,104
2.8
18,277
17,963
483
2.6
492
2.7
45,420
2,493
5.5
38,954
–516
–1.3
19,653
1,821
9.3
13,457
1,077
8.0
14,375
14,954
979
6.8
446
3.0
46,038
3,643
7.9
38,219
1,215
3.2
16,915
666
3.9
14,788
1,038
7.0
Operating income, common Group costs, etc.
–693
–775
–527
–1,055
–783
Total, continuing operations
Net sales
Operating income
Margin, %
114,228
113,048
115,463
118,981
115,960
5,320
4.7
6,353
5.6
4,176
3.6
3,189
2.7
5,778
5.0
1) Electrolux applies the new standard for revenue recognition, IFRS 15 Revenue from Contracts with Customer, as of January 1, 2018. Reported figures for 2017 have been restated to
enable comparison.
2) All years presented have been restated due to changes in the business area structure in 2019.
Non-recurring items1)
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Common Group cost
Total, continuing operations
2016
2017
—
—
—
—
—
—
—
—
—
—
—
—
20182)
–747
–596
—
—
—
–1,343
20193)
–752
–1,071
1,101
–398
–224
–1,344
2020
—
—
—
—
—
—
1) For more information, see Note 7.
2) Non-recurring items 2018: SEK –596m refers to the consolidation of freezer production in North America, SEK –747m refers to business area Europe and includes a fine of SEK –493m,
relating to an investigation by the French Competition Authority, and a cost of SEK –254m relating to an unfavorable court ruling in France.
3) Non-recurring items 2019 includes SEK –829m related to the consolidation of U.S. cooking production and SEK –225m to the closure of a refrigeration production line in Latin America,
recovery of overpaid sales tax in Brazil of SEK 1,403m, a legal settlement in the U.S. of SEK –197m and restructuring charges for efficiency measures and outsourcing projects across business
areas and Group common costs of SEK –1,496m.
ELECTROLUX ANNUAL REPORT 2020
Quarterly information
Quarterly information 85
All amounts in SEKm unless otherwise stated
Net sales and income by business area per quarter
sekm
Europe
Net sales
Operating income
Operating margin, %
North America
Net sales
Operating income
Operating margin, %
Latin America
Net sales
Operating income
Operating margin, %
Asia-Pacific, Middle East and Africa
Net sales
Operating income
Operating margin, %
Other
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Full year
2020
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Full year
2019
10,908
8,888
12,317
13,925
46,038
10,553
10,479
11,036
13,352
45,420
558
5.1
244
2.8
1,522
12.4
1,319
3,643
9.5
7.9
686
6.5
576
5.5
93
0.8
1,138
2,493
8.5
5.5
8,409
8,537
10,993
10,281
38,219
9,099
10,255
10,880
8,719
38,954
–299
–3.6
–173
–2.0
990
9.0
697
6.8
1,215
3.2
–482
–5.3
504
4.9
–20
–0.2
–519
–5.9
–516
–1.3
3,826
2,822
4,779
5,488
16,915
4,312
4,816
–15
–0.4
–183
–6.5
440
9.2
424
7.7
666
3.9
–223
–5.2
164
3.4
4,613
1,539
33.4
5,913
19,653
340
5.8
1,821
9.3
3,434
3,230
3,916
4,209
14,788
3,445
3,682
3,801
4,027
14,954
44
1.3
159
4.9
459
11.7
376
8.9
1,038
7.0
110
3.2
171
4.7
–150
–4.0
315
7.8
446
3.0
Operating income, common group costs, etc.
–165
–109
–191
–318
–783
–143
–197
–400
–315
–1,055
Total, continuing operations
Net sales
Operating income
Operating margin, %
26,578
23,476
32,004
33,902 115,960
27,408
29,232
30,330
32,011 118,981
122
0.5
–62
–0.3
3,220
10.1
2,498
5,778
7.4
5.0
–53
–0.2
1,219
1,063
4.2
3.5
960
3.0
3,189
2.7
Total Group, including discontinued operations
Income for the period
Earnings per share, SEK1)
2,509
8.73
–141
–0.49
2,356
1,860
8.20
6.47
6,584
22.91
79
0.28
1,132
3.94
739
2.57
559
1.94
2,509
8.73
Number of shares after buy-backs, million
Average number of shares after buy-backs, million
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
1) Basic, based on average number of shares, excluding shares owned by Electrolux.
Non-recurring items 1)
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Common Group cost
Total, continuing operations
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Full year
2020
Q1
2019 2)
Q2
2019
Q3
2019 3)
Q4
2019
Full year
2019
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
–829
–225
—
—
–1,054
—
—
—
—
—
—
–752
–242
1,326
–398
–224
–290
—
–752
— –1,071
—
—
—
1,101
–398
–224
— –1,344
1) For more information, see Note 7.
2) The non-recurring item of SEK –829m relates to the consolidation of U.S. cooking production and SEK –225m to the closure of a refrigeration production line in Latin America.
The costs are included in Cost of goods sold and consists of write down of fixed assets, provision for severance cost and other cost related to the projects.
3) The non-recurring item of SEK –290m includes recovery of overpaid sales tax in Brazil of SEK 1,403m, a legal settlement in the U.S. of SEK –197m and restructuring charges for efficiency
measures and outsourcing projects across business areas and Group common costs of SEK –1,496m. The income from overpaid sales tax in Brazil and the cost for legal settlement in the U.S are
included in other operating income/expenses, the costs for restructuring and outsourcing projects are included in the applicable functional lines of the income statement.
ELECTROLUX ANNUAL REPORT 2020
86 Sustainability reporting
Sustainability reporting 2020
Electrolux is a global leader in household appliances and sustainability is part of the
company’s business model as a transformational driver. This section presents the
Group’s sustainability work and the results in 2020.
Electrolux shapes living for the better by reinventing taste, care
and wellbeing experiences, making life more enjoyable and
sustainable for millions of people. As a leading global appli-
ance company, Electrolux places the consumer at the heart of
everything it does. Through the company’s brands, including
Electrolux, AEG and Frigidaire, approximately 60 million house-
hold products are sold in more than 120 markets every year.
In 2020, Electrolux had sales of SEK 116 billion and employed
approximately 48,000 people around the world. For more infor-
mation, visit www.electroluxgroup.com.
KEY RESULTS 2020
26/36%
products with leading performance accounted
for 26% of total units sold and 36% of gross profit
for consumer products in 2020
88%
share of electricity from
renewable sources
-19%
absolute CO2 emissions in operations
during 2020 compared to 2019
10,000
took part in the Electrolux Food Foundation’s activities aimed at
educating kids, adults and professionals in sustainable cooking and
UN’s Sustainable Development Goals (SDGs) and sustainable eating
Business model and sustainable development
To achieve the Electrolux purpose – shape living for the better
– and drive profitable growth, Electrolux uses a business model
that focuses on delivering outstanding consumer experiences
in taste, care and wellbeing. The objective is to create a steady
stream of consumer-relevant innovations under well-estab-
lished brands in key experience areas.
With 60 million home appliances sold annually, Electrolux has
long recognized the impact the company has on the environ-
ment and in society. Sustainable development is defined as a
transformational driver in the business model as the company
recognizes the growing importance of sustainability perfor-
mance and reputation. This includes the impact of Electrolux
business operations and products on the planet and society.
Electrolux is continuously making progress on sustainability
and is acknowledged as a sustainability leader in the household
durables industry.
BETTER LIVING PROGRAM
Better eating
Make sustainable eating
the preferred choice.
Better garment care
Make clothes last twice
as long with half the
environmental impact.
Better home
environment
Make homes healthier and
more sustainable through
smart solutions for air,
water and floors.
Better company
Make our business circular
and climate neutral.
In 2019 Electrolux introduced the Better Living Program, a plan to enable better and more sustainable living for consumers around the world
through 2030 with targets focusing on better eating, better garment care and better home environment. The initiative widens the scope of the
Electrolux commitment to sustainability and is a part of the company’s sustainability framework towards 2030.
ELECTROLUX ANNUAL REPORT 2020
Sustainability reporting 87
Electrolux in a changing world
The world in which Electrolux operates is constantly changing.
Demographic trends are increasing pressure on resources,
rapid technological development requires new business
approaches, and planetary boundaries are influencing decision
making at all levels. Such global megatrends create challenges
for Electrolux – but also bring about business opportunities.
Demographics
Global demographic trends – such as population growth, the
growing middle class, an aging population and urbanization
– are increasing the demand for home appliances, which puts
more pressure on natural resources. Between 2015 and 2030,
another billion people are expected to buy their first refrigerator.
Implications for Electrolux:
• Significant growth potential in emerging markets.
• Continued need to decrease the overall environmental foot-
print of products.
• Growing importance of the elderly consumer group and the
increasing number of smaller households.
• Potential for new business models, such as shared ownership.
Resources and planetary boundaries
The need to reduce greenhouse gas emissions, and adapt to a
changing climate and resource limitations, will drive manufac-
turers toward circular business models that promote resource
efficiency, cleaner chemistry and waste reduction.
Implications for Electrolux:
• Continued need to improve the environmental performance
of products.
• Pressure to reduce water consumption in areas with water
scarcity.
• Competition for some metals and minerals.
• Growing importance of the circular economy.
• Expectations to go beyond chemical legislation.
• Problems with plastic waste pollution increase pressure on
recycling solutions.
Technology
New technologies are scaled rapidly and globally, with purchas-
ing decisions increasingly influenced by online information and
social media. The Internet of Things (IoT) promises to connect
billions of products in the near future.
Implications for Electrolux:
• Greater consumer empowerment and awareness require
transparency and sustainable business practices.
• Digitalization will drive the next wave of operational efficiency,
including closer integration with suppliers.
• Connectivity offers opportunities for new business models that
result in better resource efficiency.
• IoT enables a lifelong relationship between producers and
consumers, but requires high standards of data security and
privacy.
Materiality
Material issues are topics that reflect the most significant eco-
nomic, environmental and social impacts for Electrolux.
The materiality process aims to identify and understand
the topics that are important to stakeholders, as well as to the
Group’s business strategy. It is an important way of evaluating
the ability to create and sustain value.
Electrolux draws on insights from global trends and drivers,
market intelligence, product research, internal and external dia-
logue, expert opinion and consumer surveys, and other sources
of information to develop an up-to-date understanding of the
prevailing business context.
The material issues are expressed in the Group’s sustainability
framework – For the Better – as nine promises with defined 2030
sustainability goals, and supported by key performance indica-
tors (KPIs). See page 88 or www.electroluxgroup.com/sustain-
ability for more details about For the Better.
AVERAGE CO2 IMPACT DURING THE LIFETIME OF APPLIANCES1)
Recycling 1%
Materials, 7%
Manufacturing, 1%
Transportation, 1%
Product usage, 85%
Greenhouse gas, 5%
The product life cycle perspective guides how to best reduce
climate impacts. The greatest carbon emission impacts in the
Electrolux value chain occur from energy consumption when
products are used. See page 89 for more on the company’s
Climate Targets.
1) The graph is based on the Group’s total CO2 impact in 2015 (82 million metric tons)
used for setting Science Based Targets.
ELECTROLUX ANNUAL REPORT 2020
88 Sustainability reporting
For the Better
In 2020, Electrolux launched its new Group sustainability framework – For the Better 2030. The
outgoing sustainability framework – For the Better 2020 – was also completed during the year.
See the separate Electrolux Sustainability Report 2020 for more on the company’s sustainability
achievements between 2015 and 2020.
FOR THE BETTER
The Electrolux new sustainability framework comprises of three areas: Better Solutions, Better Company and Better Living, which are divided into nine promises to make a
positive difference for the better. For the Better 2030 includes the company’s Climate Targets and overarching objectives to become climate neutral and more circular.
Better Solutions
Better Company
Better Living
Lead in energy- and
resourceefficient solutions
Be climate neutral and drive clean
and resource-efficient operations
Make sustainable eating
the preferred choice
Offer circular products and
business solutions
Act ethically, lead in diversity
and respect human rights
Make clothes last twice as long
with half the environmental impact
Eliminate harmful materials
Drive supply chain
sustainability
Make homes healthier and more
sustainable through smart solutions
for air, water and fl oors
Support the UN Sustainable Development Goals and Climate targets
Better solutions
Electrolux works to continuously improve its products and
services to make them better for consumers and the planet, and
to take leadership on global sustainability challenges with a
scientific and long-term approach.
Lead in energy and resource-efficient solutions
Tackling climate change and the increasing demand for water are
among the most urgent challenges facing society. Electrolux con-
tributes by offering resource-efficient products that help consum-
ers to live better lives, save money and reduce their environmental
footprint. In 2020, the most efficient products in the Electrolux
range represented 26% of products sold and 36% of gross profit.
Offer circular products and business solutions
Electrolux aims to contribute to the circular economy by inte-
grating recycled materials into product platforms, promoting
recyclability, using more sustainable packaging solutions,
increasing the availability of spare parts to repair Electrolux
products, and developing circular business solutions. Progress in
2020 included setting ambitious targets to incorporate recycled
materials into Electrolux products. Several circular business
models were further developed during the year, including
pilot projects with municipal housing companies in Sweden to
maintain washing machines and subscription-based business
models, such as for the award-winning Pure i9 robotic vacuum.
Eliminate harmful materials
Electrolux has a robust approach to choosing materials for its
products to protect human health and the environment. The
Group continues to implement its common process for chemical
management. New scientific findings and stakeholder require-
ments are used to update the Group’s Restricted Materials List.
During the year, the global roll out of the Eco@web tool contin-
ued and implementation in Asia-Pacific and Egypt was com-
pleted, including two recently acquired cooker hood factories.
In 2020, Electrolux submitted a plan to the UN Cool Coalition ini-
tiative to accelerate the removal of F-gases from new Electrolux
products by 2023 at the latest.
OPERATIONAL RESOURCE EFFICIENCY
ELECTROLUX –50% CLIMATE TARGET FOR 2020
INDEX
100
80
60
40
20
0
–39%
16
17
18
19
20
Energy per standard unit
Energy consumption
CO2 emissions
Water consumption
This target aimed to reduce climate impact by 50% focusing on product efficiency, and
it encompassed main product categories. Sales volumes and emission factors were
normalized to 2005. The Group’s 50% target was not reached mainly due to delays in
legislation and product efficiency regulation in key markets.
The 50% target was established in 2013, before the UN Paris agreement in 2015 and
launch of the Science Based Target (SBT) initiative. The Electrolux SBT now replaces the
50% target. For more results see the separate Electrolux Sustainability Report online.
ELECTROLUX ANNUAL REPORT 2020
Sustainability reporting 89
Better Company
Electrolux aspires to demonstrate its sustainability leadership
throughout the company and acknowledges the supply chain
as part of its promise as a brand.
Be climate neutral and drive clean and
resource-efficient operations
Electrolux will continue to reduce its environmental footprint by
shifting to renewable energy and optimizing energy use and
other resources throughout its operations. The ambition is to
have climate neutral operations by 2030. In 2020, absolute CO2
emissions were reduced by 19% compared to previous year,
and energy efficiency improved by 45% compared to 2005.
By the end of 2020, 53% of the total energy used came from
renewable sources. In addition, the Group has its own solar
photovoltaic systems in seven countries.
Act ethically, lead in diversity and respect human rights
Electrolux will earn the trust of everyone impacted by its opera-
tions, demonstrating its commitment to ethics, diversity and
human rights through its words and actions. This includes work-
ing to ensure the health and safety of Electrolux employees,
and promoting societal benefit through community investment
activities. The Group achieved its lowest recorded injury rate
level reaching TCIR 0.5 for 2020.
Better Living
Electrolux uses its global reach and presence to drive and con-
tribute to positive change, reaching beyond the company’s own
products and footprint.
Make sustainable eating the preferred choice
Electrolux will promote sustainable eating by helping consum-
ers to reduce food waste, adopt more plant-based eating,
minimize nutrition loss in cooking, and enhance sustainable
eating experiences. By offering new products, solutions and
partnerships, Electrolux can promote more sustainable eating.
In 2020, Electrolux raised awareness on sustainable food habits
through website food storage advice, an app and Electrolux
Food Foundation initiatives with partners Worldchefs, WWF and
AIESEC.
Make clothes last twice as long with half the
environmental impact
Electrolux has the objective to make clothes last longer and
reduce the environmental impact of garment care while caring
for all fabrics. By providing new products, solutions, campaigns
Climate targets
The greatest carbon emission impacts in the Electrolux value
chain occur from energy consumption when products are used.
Electrolux has a Science Based Target that aligns its business
with the objective in the Paris Agreement to limit global warm-
ing to well below 2°C. This involves reducing absolute carbon
THE ELECTROLUX CLIMATE NEUTRALITY ROADMAP
80% carbon emissions reduction in operations
25% carbon emissions reduction in produce use
1
Climate neutral operations
2
Climate neutral across the value chain
2015
2020
2025
2030
1) Science based target (SBT) Scope 1, Scope 2 and Scope 3
2) Electrolux Better Living Program Company target
ELECTROLUX ANNUAL REPORT 2020
3) United Nations Global Compact Business Pledge
Work with local human rights impact assessments continued
during 2020, although work was affected by the coronavirus
pandemic and some activities were conducted digitally.
E-learnings on the Anti-corruption and Workplace Policies were
rolled out during the year.
Drive supply chain sustainability
Electrolux will take its sustainability leadership agenda into the
supply chain by working with suppliers to comply with the Group’s
high expectations, no matter where they are located, and the
company drives and supports the transition to more sustainable
practices. The Responsible Sourcing Program partially shifted to
digital activities in 2020 due to the Covid-19 pandemic. The total
number of audits, both physical and digital, was 261 in 2020.
The Electrolux Supplier Awards were reinvented in 2020, with
sustainability added as a new category, reflecting the need for
suppliers to support all For the Better 2030 promises. Electrolux
also secured the commitment from its top 192 suppliers to dis-
close emissions and set targets through the CDP Supply Chain
Program, which will play a key role in achieving the company’s
target for zero net carbon emissions throughout its supply chain
by 2050.
and partnerships Electrolux can promote more sustainable gar-
ment care. In 2020, Electrolux inspired consumers to better care
for their clothes and reduce water use through the global Make
it last campaign. It also launched the 50L Home partnership with
global brands and NGOs to re-imagining the use of water in
homes and address water efficiency.
Make homes healthier and more sustainable through
smart solutions for air, water and floors
Electrolux will inspire more sustainable habits in caring for
homes, pioneer knowledge and new standards for a healthier
home environment, and enable wellbeing at home with reduced
environmental impact. By providing new products, solutions
and partnerships, Electrolux can make the indoor environment
healthier and more sustainable. In 2020, Electrolux signed the
UN Cool Coalition initiative – as part of the initiative, we will
replace all high-impact greenhouse gases in all of our appli-
ances with more sustainable alternatives by 2023 at the latest.
dioxide emissions from operations by 80% and emissions from
products by 25% by 2025 compared to 2015, and has been
verified by the Science Based Targets Initiative to be in line
with a 1.5°C climate scenario. Electrolux has also committed to
becoming carbon neutral in its operations by 2030, and through
the UNGC’s Business Ambition for 1.5°C to have net zero emis-
sions throughout its value chain by 2050.
1. Science Based Target (SBT)
Scope 1 + Scope 2 – 80% reduction and
Scope 3 – 25% reduction by 2025
2. Company target, Climate neutral operations
(Scope 1 + Scope 2 = 0) by 2030
3. UNGC Business ambition for 1.5 °C
– climate neutral value chain by 2050
3
2050
90 Sustainability reporting
Managing sustainability – Risks and Opportunities
Governance
The Group’s sustainability framework – For the Better – is directly
overseen by the Group Management and the Business Areas’
Management teams that have been engaged in the develop-
ment of the priorities and objectives for the nine promises and
the climate targets.
In 2019, Electrolux formed the Sustainability Board led by the
CEO, tasked with assessing priorities, monitoring progress and
evaluating risks. The board will propose actions and targets
to Group Management, and will be essential in delivering on
Electrolux sustainability targets going forward.
Regular education and communication on the Code of
Conduct and key Group Policies was introduced. All office based
staff must acknowledge the Code of Conduct by electronic
signature.
Each business area is responsible for contributing to the fulfill-
ment of the Group’s sustainability targets under the nine prom-
ises, and several of the KPIs are broken down and monitored at
business area level. Reference groups and steering groups with
Group Management and senior management participation are
in place for various programs; for example, the Ethics & Human
Rights Steering Group; Group Operations; External Affairs; and
Chemicals.
A number of Group functions are accountable for identifying
and managing non-financial risks in their area of responsibility.
Risks are reported to Group Management, and they feed the
materiality process.
Key sustainability governance responsibilities:
• The Board of Directors is responsible for identifying how sus-
tainability issues impact risks to and business opportunities for
the company.
• Electrolux Group Management makes decisions about sus-
tainability priorities and monitors progress.
• Internal Audit evaluates and improves governance, internal
control and risk management processes.
• Group Risk Management benchmarks and monitors key risks
in operations and critical suppliers.
• Group Legal Affairs is responsible for implementing an anti-
corruption program.
• Sourcing Boards within Purchasing and Product Sourcing are
responsible for monitoring supplier compliance, with the sup-
port of the Responsible Sourcing team.
• Group Sustainability Affairs assesses materiality, develops
policies, targets, monitors the implementation of programs,
and manages the Responsible Sourcing program.
• The Ethics Helpline (whistleblower function) and programs for
ethics and human rights are overseen by the Ethics & Human
Rights Steering Group.
Aspect
Policies
Environment
• Environmental Policy
• Workplace Policy
Key areas
• Product design
• Efficiency in operations
• Influencing legislation
Social, labor and human rights
• Workplace Policy
• Supplier Workplace Standard
• Workplace Directive
• Child and forced labor
• Health and safety, working
hours, compensation
• Discrimination and harassment
• Environmental management
systems
• Freedom of association,
collective bargaining
The full text of Electrolux policies is available at www.electroluxgroup.com/en/category/sustainability/codes-and-policies
Anti-corruption
• Anti-Corruption Policy
• Conflict of Interest Policy
• Conflict of interest
• Bribes or other improper
benefits
• Business partners and
customers
• Political contributions
Environment
From a product life-cycle perspective, Electrolux has a relatively
large environmental impact – including energy consumption,
use of materials and chemicals. Generally, the most significant
impacts occur during a product’s use phase, and the Group’s
strategy is to improve product performance.
The Electrolux Environmental Policy outlines how Electrolux
aims to improve environmental performance in production and
product use, as well as how to design products for disposal.
Requirements for the Group’s operations and in supply chain
are described in the Workplace Directive. All Electrolux facto-
ries with more than 50 employees are required to be ISO 14001
and ISO 50001 certified.
Group requirements on suppliers are described in the
Supplier Workplace Standard and the Workplace Directive.
Compliance is mandatory when evaluating potential and exist-
ing suppliers. The Group’s strategic suppliers of components and
finished products must take energy efficiency measures, and
report on energy and water. Some have also been included in
the WWF Water Risk Filter assessment.
Electrolux responds to the annual CDP Climate and Water
questionnaires. In 2020, Electrolux achieved A both in CDP
Climate and CDP Water.
The Group’s proactive approach aims to develop and pro-
mote sales of products with lower environmental impact. Readi-
ness for more stringent product legislation, for example, can lead
to increased sales. For many years, products with superior envi-
ronmental performance have delivered higher profit margins.
ELECTROLUX ANNUAL REPORT 2020
Sustainability reporting 91
Electrolux products are affected by legislation in areas including
energy consumption, producer responsibility, and management
of hazardous substances. Some customers have requirements
that go beyond legislation.
The main environmental risks are related to regulatory and
customer requirements (see pages 92 - 93). Not meeting require-
ments could result in fines or limitations in production permits,
reduced sales or product withdrawal. Electrolux has processes
in place to mitigate these risks, including ISO management
systems, internal audits, a Responsible Sourcing program, and
targets in the product development plans. The Group’s programs
to reduce operational resource consumption and to introduce
more recycled materials in products are saving costs.
In 2018, the Group’s Science Based Target in line with the Paris
Agreement (COP 21) were approved.
In March 2019, Electrolux introduced the world’s first green bond
framework in its industry to raise funds earmarked for invest-
ments contributing to reduced environmental impacts from the
company’s products and operations. The proceeds are used to
finance projects identified within environmental sections in the
Electrolux sustainability framework For the Better. To increase
the internal focus on actions to reduce climate change, a
performance target linked to the Groups Science Based Target,
within the long-term share-related incentive programs for senior
managers, was implemented 2020.
Please see Electrolux Green Bond Framework and
Green Bond Impact Report:
https://www.electroluxgroup.com/en/green-bond-
framework-29317/
Social, labor and human rights
Electrolux reputation is built on trust, which means that all
actions and decisions must be governed by principles of ethics,
integrity, and respect for people and care for the environment –
no matter where the Group operates in the world.
Consumers are increasingly making purchasing decisions
based on their trust in companies and how they contribute to
society. Additionally, employees prefer to work for a company
with values that match their own. Respecting human rights and
being an ethical company goes beyond simply meeting legal
requirements. It is about guiding employees to know what is
right and wrong, and how to make decisions accordingly. The
goals in For the Better reflect the Group’s commitment to build
a strong culture for ethics and human rights.
The key human rights risks include freedom of association,
discrimination and working conditions. Other risks are privacy
of information, and corruption.
The Electrolux Code of Conduct was launched in 2018, and
contains the Group’s Human Rights policy statement, firmly
stating that human rights shall be respected. During 2019, Code
of Conduct e-learning and communications was rolled out to
employees. The Group’s human rights commitment is further
detailed through a new Human Rights Directive. The Workplace
Policy, the Supplier Workplace Standard and the Workplace
Directive contain mandatory requirements relating to labor rights,
health, safety and environment within Electrolux and suppliers.
Electrolux monitors performance and manages risks
through internal and external audits, an annual self-assess-
ment process for manufacturing units, local human rights
assessments, education, the Ethics Helpline, management-
labor dialogue, as well as health and safety committees. Risks
in the supply chain are addressed through audits and training
efforts as part of the Responsible Sourcing program and the
Conflict Minerals program
Human rights procedures engage many functions through-
out the organization, from Human Resources to Purchasing and
Group Operations. Accountability for the ethics program and
the oversight of human rights lies with the Ethics & Human Rights
Steering Group, which comprises of senior management repre-
sentatives from Group functions.
Electrolux conducts human rights impact assessments at
both Group and local level, in line with the UN Guiding Principles
on Business and Human Rights. Five issues and three business
processes constitute the Group’s salient human rights issues.
The methodology for the assessments focuses on identifying the
risk of harming people, as a direct or indirect result of Electrolux
operations. In 2020, the focus was on following up on the actions
from the assessments conducted in Egypt, Thailand and Ukraine
in 2017 and 2018.
Anti-corruption
Corruption poses a threat to sustainable economic and social
development around the world and in particular in poor com-
munities. Corruption could also have severe negative impacts
for the Group by obstructing business growth, increasing costs
and imposing serious legal and reputational risks. Operating
in 58 countries all over the world, including countries in emerg-
ing markets, Electrolux is exposed to risks related to corruption
and bribery. These risks may arise in several phases of the value
chain, such as in purchasing and sales.
Electrolux has zero tolerance of corruption and works contin-
uously to raise awareness among employees in order to mini-
mize the risk for corruption. Measures against corruption are
included in the Anti-Corruption Policy, which all employees are
required to follow. This policy provides guidance to employees
on how to do the right thing and explains what actions consti-
tute unlawful and inappropriate behavior.
Employees can report ethical misconduct through a whistle-
blower system. In 2020, 258 (215) reports were received, out
of which 16 (19) reports in the area of business integrity were
investigated. Business integrity includes allegations related
to corruption, fraud, theft, internal control and anti-trust.
ELECTROLUX ANNUAL REPORT 2020
Electrolux conducts Group-wide e-learning courses on anti-
corruption. These initiatives complement the tailored training
that certain functions such as sales, procurement and senior
management receive (roles that are more exposed to corruption
risks). Such face-to-face training sessions have been conducted
locally throughout the organization by either in-house legal
counsel or by external experts. Training requirements are contin-
uously monitored and evaluated based on business needs, and
the legal and risk context. The local human rights assessments
include the review and assessment of corruption risks.
>16,000
employees completed the e-learning on the
Anti-Corruption Policy during 2020
92 Sustainability reporting
Impacts throughout the value chain
A value chain
perspective helps
Electrolux identify how
it can best manage its
impacts and create
maximal value.
This approach makes it
easier to identify opportuni-
ties, minimize or enhance
impacts, and understand
boundaries. It also helps the
company to understand
how its actions and impacts
are interrelated.
The following section
identifies the Group’s key
sustainability risks and
impacts, and how they are
managed. It also identifies
the degree of influence
along the value chain, and
the value created for the
company and the society.
Product
development
Suppliers
Electrolux
operations
Close collaboration between
Design, Marketing and R&D
enables new products to
offer best-in-class consumer
experiences. The ambition
is to develop solutions with
leading environmental per-
formance. Timely innovation
is key to meeting forthcoming
legal requirements and mar-
ket demands. The focus is on
energy, water and material
efficiency, as well as chemical
use in appliances.
Risks
• Not meeting regulatory or
market requirements.
• Not meeting consumer
expectations.
• Not adapting to a low-
carbon economy.
How impacts are managed
• Continuously improve prod-
uct efficiency.
• Increase use of recycled
materials.
• Eliminate harmful materials.
• Integrate future require-
ments into product develop-
ment plans.
• Participate in the UN’s
United for Efficiency
program.
Electrolux relies on thousands
of first-tier suppliers, many in
emerging markets. The focus
is on safeguarding Electrolux
standards and developing
supplier capacity to improve
sustainability performance.
Electrolux also requires all
its suppliers to comply with
Electrolux Supplier Workplace
Standard and the Workplace
Directive.
Risks
• Connections to social,
ethical and human rights
violations.
• Severe weather conditions
caused by climate change
could negatively affect
supply.
• Business interruptions due to
unethical business practices
in the supply chain.
How impacts are managed
• Apply a risk-based
approach to identify suppli-
ers in scope.
• Assess the climate impact
of key suppliers.
• Conduct auditing to safe-
guard standards.
• Hold training and drive
improvement programs.
Ability to influence - High
Ability to influence - Medium
Generating value
Products with leading envi-
ronmental performance
deliver customer value in line
with the business strategy,
while reducing negative
impact on the environment.
Generating value
Enforcing Electrolux stan-
dards supports human rights
and raises environmental,
labor and economic stan-
dards, particularly in emerg-
ing markets. This also builds
trust and a resilient supply
chain, while reducing busi-
ness and reputational risks.
Electrolux has 35 finished goods
factories and 5 factories mak-
ing parts and accessories,
and sales in 120 markets, with
approximately 48,000 employ-
ees. The main focus areas are
to reduce the environmental
footprint, maintain high ethical
standards and working condi-
tions, as well as to have a posi-
tive impact in local communities.
Risks
• Disruptions due to emissions
and discharges as a result of
incidents.
• Disruptions caused by severe
weather as a result of climate
change.
• Impact due to social, ethical
and human rights violations.
• Corruption related to weak
governance.
How impacts are managed
• Implement and maintain
systems for environment,
resource efficiency, and health
and safety.
• Governance systems and
training to enforce sustainabil-
ity policies.
• Assess the climate impact
on operations.
• Conduct human rights impact
assessments.Support local
community programs.
Ability to influence - High
Generating value
Electrolux creates commu-
nity benefit by providing jobs,
knowledge transfer and eco-
nomic opportunities. Positive
employee relationships pro-
mote competence develop-
ment, employee wellbeing and
job satisfaction. Local commu-
nity engagement creates good
stakeholder relations, improves
employee pride and enhances
brand reputation.
ELECTROLUX ANNUAL REPORT 2020
Sustainability reporting 93
Transport
Sales
Consumer use
End-of-life
Electrolux sells approximately
60 million products in over 120
markets every year, primarily
through retailers. Energy and
performance labeling, and
sustainability communica-
tion allow us to raise product
efficiency awareness among
consumers.
As the main environmen-
tal impacts of Electrolux
products occur when they
are used, product energy
and water efficiency is a top
priority.
Greater use of connected
products in the future will help
improve optimal product use.
Risks
• Failure to effectively inform
consumers on product use.
• Not meeting consumer
expectations on product
efficiency.
• Limited opportunity to influ-
ence decision-making at the
point-of-purchase.
• Corruption.
How impacts are managed
• Continuously improve
product performance and
efficiency.
• Improve pre- and point of
purchase communication.
• Secure third party endorse-
ment of products (such as
best-in-test recognitions).
• Communicate on themes
such as food storage, reduc-
ing food waste, caring for
clothes and textiles.
• Conduct Group-wide train-
ings on anti-corruption.
Ability to influence - Medium
Generating value
Promoting transparency
and the Group’s sustainable
product offering contributes
to retailer sustainability goals,
strengthens brands and
builds customer loyalty. As
sales of the Group’s products
with leading environmental
performance demonstrate,
an efficient product offering is
a profitable strategy.
Risks
• Not meeting expectations
on product performance.
• Consumers not using prod-
ucts in an optimal way.
• Product safety.
• Data privacy for users of
connected products.
How impacts are managed
• Continuously improve
product performance and
efficiency.
• Better Living Program
• Prepare for increased data
privacy regulation.
• Follow the product safety
governance and proce-
dures.
• Increase development
and sales of connected
products.
Ability to influence - Medium
Generating value
Appliances deliver social
benefits that many take for
granted – such as food pres-
ervation, hygiene standards,
freeing up time from house-
hold chores, and facilitating
equal opportunities – factors
that are particularly sig-
nificant in emerging markets.
Providing efficient products,
raising consumer awareness
and increasing appliance
connectivity can help counter
rising global CO2 emissions,
while reducing food waste
and the wear of clothes.
Legislation on appliance
recycling is being introduced
in more markets. On aver-
age, materials account for
approximately 7% of a prod-
uct’s life-cycle impact, and
Electrolux market research
indicates that it is a top
priority for consumers.
In Europe, the region
with the most comprehen-
sive producer responsibility
legislation, 80% of the materi-
als from collected end-of-life
large appliances must be
recovered.
Risks
• Not meeting expectations
beyond legislation.
• Waste of resources due to
a lack of recycling.
• Illegal trade of discarded
products and recycled
materials.
How impacts are managed
• Establish a more circular
business by using recycled
materials.
• Eliminate harmful materi-
als to enable higher quality
recycled materials and
decrease environmental
impact.
• Promote proper recycling as
part of producer’s respon-
sibility.
Ability to influence - Low
Generating value
Building resource-efficient
and closed-loop systems help
reduce environmental impact
and overall resource con-
sumption. Innovative designs
that allow material reuse
saves money and energy, and
increases consumer trust in
the Electrolux brand.
Addressing transportation is
part of a life-cycle approach
to the Group’s overall impacts.
Electrolux emits more CO2
transporting its goods than it
emits through the total energy
used in the Group operations.
Approximately 300,000
metric tons are emitted annu-
ally through the distribution of
goods via sea, land and air in
Europe, North America and
Brazil.
Risks
• Emissions from transporta-
tion.
• Labor conditions in logistics
companies.
• Disruptions caused by
severe weather as a result
of climate change.
How impacts are managed
• Implement collaborative
solutions to mitigate logis-
tics-related impacts.
• Promote efficient modes of
transport.
Ability to influence - Medium
Generating value
Helping to create a more
sustainable transport indus-
try strengthens the Group’s
brand reputation. Transport
is included in the Electrolux
carbon target. It also sup-
ports suppliers in their work to
improve their environmental
and labor standards.
ELECTROLUX ANNUAL REPORT 2020
94 Sustainability reporting
The sustainability reporting section in the administration report has been developed to fulfill the requirements in the Swedish Annual
Accounts Act. For more detailed information on Electrolux and sustainability, please read the Sustainability Report prepared according
to the GRI Standards at: www.electroluxgroup.com/sustainability
Sustainability reporting and information
The Electrolux sustainability routines and systems for informa-
tion and communication aim at providing key stakeholders
with accurate, relevant and timely information concerning the
targets and results of the Group’s sustainability framework, For
the Better.
The sustainability reporting section in the administration
report has been developed to fulfill the requirements in the
Swedish Annual Accounts Act. This report also highlights how
the Group’s priorities reflect its commitment to the 10 principles
of the UN Global Compact. Unless otherwise indicated, sustain-
ability disclosures include all operations that potentially can
affect Group performance for calendar year 2020.
Sustainability information is shared regularly in the form of:
• Electrolux Sustainability Report, including
-United Nations Global Compact, Communication on
Progress
-United Nations Guiding Principles Reporting Framework
• Sustainability in Brief
• Mandatory reporting regarding transparency in the
supply chain
• Press releases
• Meetings with key stakeholders worldwide
• Responses to questionnaires from investors and analysts
• Annual submission to CDP for climate and water
Reports, policies and press releases are available at:
www.electroluxgroup.com
Stockholm, February 17, 2021
AB Electrolux (publ)
Board of Directors
Auditor’s report on the statutory sustainability report
To the general meeting of the shareholders in AB Electrolux
(publ), corporate identity number 556009-4178.
Engagement and responsibility
It is the board of directors who is responsible for the statutory
sustainability report for the year 2020 on pages 86-94 and that
it has been prepared in accordance with the Annual Accounts
Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s
auditing standard RevR 12 The auditor´s opinion regarding the
statutory sustainability report. This means that our examination
of the statutory sustainability report is substantially different
and less in scope than an audit conducted in accordance with
International Standards on Auditing and generally accepted
auditing standards in Sweden. We believe that the examination
has provided us with sufficient basis for our opinion.
Opinion
A statutory sustainability report has been prepared.
Stockholm, February 17, 2021
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and the
Swedish language original, the latter shall prevail.
ELECTROLUX — A LEADER IN THE HOUSEHOLD DURABLES INDUSTRY
The Group’s sustainability performance strengthens relations with
investors and Electrolux is recognized as a leader in the household
durables industry. In 2020, Electrolux was included in the Dow Jones
Sustainability Index (DJSI) World and Europe indexes and thereby
ranks among the top 10% of the world’s 2,500 largest companies for
social and environmental performance. Additionally, Electrolux has
received recognition from other indexes and organizations, includ-
ing SAM, OEKOM, CDP and UN Global Compact Top 100.
ELECTROLUX ANNUAL REPORT 2020
Climate-Related Financial Disclosures 95
Climate-Related Financial
Disclosures
About this Report
This is the first Electrolux climate report based on the Task
Force on Climate-related Financial Disclosure (TCFD) recom-
mendations. The purpose of the report is to assess how climate
change could affect Electrolux in the long term, but also the role
Electrolux plays in mitigating climate change. In accordance
with the TCFD recommendations, this report is based on two
potential future climate scenarios and how these could impact
climate-related risks and opportunities for Electrolux in the future.
The scenarios have been selected to represent two possible
future developments paths, where each scenario is character-
ized by different societal impacts. For each scenario long-term
perspectives of 10 and 30 years have been used to assess
climate-related risks and possibilities based on what the Group
considers to be best available knowledge. The climate report
describes the Group’s continuous assessment of climate-related
risks and opportunities based on the development of stake-
holder expectations, scientific findings, regulatory requirements
and frameworks for company reporting. Electrolux is committed
to annually publish a climate report based on the TCFD rec-
ommendations and the company plans to further develop its
reporting going forward, as climate science and more extensive
analyses evolve. This report is structured around the four TCFD
elements describing how organizations operate: governance,
strategy, risk management, and metrics and targets. All these
elements are related to climate-related risks and opportunities
Governance
Strategy
Disclose the organization’s
governance around
climate-related risks and
opportunities.
Disclose the actual and
potential impacts of climate-
related risks and opportuni-
ties on the organization’s
businesses, strategy, and
financial planning where such
information is material.
Risk
Management
Disclose how the
organization identifies,
assesses, and manages
climate-related risks.
Metrics and
Targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
About TCFD
The international Task Force on Climate-related Financial Disclosure
(TCFD) was formed in 2015 by the Financial Stability Board and tasked
with correcting the shortage of information regarding companies’
work with, and management of, climate change. In 2017, the TCFD
released climate-related financial disclosure recommendations
designed to help companies promote more informed investment,
credit and underwriting decisions and enable stakeholders to better
understand the financial system’s exposure to climate-related risks.
Governance
Electrolux has governance structures to effectively
manage climate-related risks and opportunities.
Climate change management
The Electrolux climate change strategy is managed by Group
Sustainability Affairs (GSA) in close cooperation with other
Group staff functions and the Business Areas. The Head of GSA
reports to the Chief Experience Officer (CXO) and has regular
meetings with the Sustainability Board and Group Management.
The CEO reports climate-related progress to the Board,
which oversees the overall company strategy. The Electrolux
Sustainability Board, chaired by the CEO, is a forum to raise sus-
tainability topics and review the implementation of the different
sustainability programs.
Other members of the Sustainability Board are the Chief
Financial Officer (CFO), Chief Operations Officer, CXO, Head
ELECTROLUX ANNUAL REPORT 2020
of HR & Communications, General Counsel and Head of GSA.
The Sustainability Board gives recommendations to Electrolux
Group Management, which makes decisions about sustainabil-
ity and climate-related issues.
Group Risk Management manages the Electrolux Enterprise
Risk Management (ERM) program. This program is governed
by the ERM board, which consists of the CEO, CFO, General
Counsel, Head of Group Internal Audit, and Head of Group Risk
Management. The ERM program manages risks related to direct
climate impacts and covers both identified and emerging risks,
and with a time-horizon of around three years.
To increase the internal focus on actions to reduce climate
change, a performance target linked to the Group’s Science
Based Target, within the long-term share-related incentive pro-
grams for senior managers, was implemented 2020 (“LTI 2020”).
96 Climate-Related Financial Disclosures
Strategy
Climate change is a core element of the Electrolux
Group sustainability framework, which includes the
company’s climate targets, various climate-related
activities and work with its stakeholders.
For the Better 2030
The Group’s sustainability framework – For the Better 2030 –
consists of Better Solutions, Better Company and Better Living. It
covers all the lifecycle stages of the company’s products – from
raw materials and manufacturing to product use and how
Electrolux can contribute to more sustainable living for consum-
ers around the world.
For the Better 2030 includes the company’s work with climate
change and its climate targets through the Electrolux Climate
Neutrality Roadmap (see below). Climate-related topics in
the sustainability strategy include the objective to ‘Be climate
neutral and drive clean, resource-efficient operations’ (scope
1 and 2 emissions) and the objective to ‘Lead in energy- and
resource-efficient solutions’ (scope 3 emissions). Scope 1 and 3
are also addressed through the objective to ‘Eliminate harmful
materials’, by phasing out hydrofluorocarbons (HFCs).
See the Electrolux Annual Report 2020, Sustainability Report-
ing on p. 88 for more details about For the Better 2030.
The Electrolux Climate Neutrality Roadmap
The company’s long-term ambition is to ensure that its entire
value chain is climate neutral by 2050. This supports the United
Nation’s Global Compact – Business Ambition for 1.5° C, which
Electrolux President and CEO Jonas Samuelson has signed.
Two shorter-term company targets act as stepping stones to its
long-term ambition:
• Science Based Target – aims to reduce company scope 1 and
2 emissions by 80% between 2015 and 2025, and the absolute
scope 3 emissions from the use of sold products by 25% during
the same time period.
• For the Better 2030 sustainability framework target – aims to
achieve climate neutral operations by 2030 (scope 1 and 2
emissions).
Climate targets include increasing the amount of renewable
electricity from 88% in 2020 to 100% by 2025.
Initiatives to contribute toward the company’s strategy
Electrolux has a variety of initiatives that are fundamental for
driving its climate objectives forward. These include financial
mechanisms and partner collaboration.
Electrolux Green Bond Framework
In 2019, Electrolux became the first company in its industry to
launch a Green Bond Framework to fund climate investments
and other environmental initiatives.
Long-term Incentive program
Within LTI 2020 a performance target linked to reducing climate
impact in accordance the Group’s Science Based Target was
introduced.
Examples of Electrolux climate-related collaboration
United for Efficiency (U4E) – Electrolux participates in the United
Nations led initiative United for Efficiency to support develop-
ing countries and emerging economies in setting up effective
product performance and labelling systems to help facilitate
a complete market transformation to energy-efficient cooling
appliances. Currently, only 50% of the use phase emissions from
products sold by Electrolux are covered by product efficiency
standards.
The Cool Coalition – The Cool Coalition was initiated by
UNEP with the objective to improve the energy efficiency and
to reduce the environmental impact of cooling appliances.
Electrolux has made the commitment to phase out or replace
high-impact greenhouse gases in all appliances with gases that
have low global warming impact by 2023.
THE ELECTROLUX CLIMATE NEUTRALITY ROADMAP
80% carbon emissions reduction in operations
25% carbon emissions reduction in produce use
1
Climate neutral operations
2
Climate neutral across the value chain
2015
2020
2025
2030
1) Science based target (SBT) Scope 1, Scope 2 and Scope 3
1. Science Based Target (SBT) Scope 1 + Scope 2 – 80% reduction and Scope 3 – 25% reduction by 2025
2) Electrolux Better Living Program Company target
2. Company target, Climate neutral operations (Scope 1 + Scope 2 = 0) by 2030
3) United Nations Global Compact Business Pledge
3. UNGC Business ambition for 1.5 °C – climate neutral value chain by 2050
3
2050
ELECTROLUX ANNUAL REPORT 2020
Climate-Related Financial Disclosures 97
The Electrolux climate scenarios
Electrolux mainly uses two different climate scenarios based on
data from the International Panel on Climate Change (IPCC)
and the International Energy Agency (IEA) to assess the resil-
ience of its business. This includes its potential medium- and
long-term climate-related risks and opportunities throughout
the appliance industry value chain.
According to the TCFD Recommendations, companies should
base their climate-related risks and opportunities on two differ-
ent climate scenarios. In alignment with these recommenda-
tions, the two scenarios Electrolux uses have different levels
of projected emission reductions over the time horizons of 10
years and 30 years1). They are referred to as the Rapid Transition
Scenario and the Changing Climate Scenario.
The Rapid Transition Scenario
This scenario would involve rapidly declining emissions in
the coming decades, resulting in a global average tem-
perature rise of between 0.3°C to 1.7°C by 2100. This ‘very
stringent’ pathway would require transitional changes
to achieve the UN Paris Climate Agreement, including a
decline in emissions from 2020.
Key climate implications
• A mean global warming increase of approximately
1.0 °C between 2046 and 2065.
• A mean sea level increase of approximately 0.24 m
between 2046 and 2065.
Implications for the appliance industry
• Stringent product energy legislation – will impact on
product development and sales.
• Carbon taxes – will impact on suppliers, operations and
sales.
• Digitalization and smart demand-side management –
will impact on product development and sales.
The climate implications in this scenario are based on the
IPCC Scenario RCP 2.6 and the IEA SDS Scenario2).
The Changing Climate Scenario
This scenario would involve slowly declining emissions
resulting in a temperature increase of approximately
1.4°C to 3.1°C by 2100. This ‘intermediate’ pathway would
follow the current emission path to peak in 2040 with long-
term physical risks as a result of climate change.
Key climate implications
• A mean global warming increase of approximately 1.4
°C between 2046 and 2065.
• A mean sea level increase of approximately 0.26 m
between 2046 and 2065.
Implications for the appliance industry
• Greater acute physical risks due to more frequent and/
or more severe weather systems, such as hurricanes and
floods – will impact on suppliers, operations and trans-
port in the appliance industry.
• Greater chronic physical risks from changing climate
conditions, such as droughts and sea level rise – will
impact on suppliers, operations and transport in the
appliance industry.
The climate implications in this scenario are based on the
IPCC Scenario RCP 4.5 and the IEA STEPS Scenario3).
1) Electrolux has based its climate scenarios and impacts on two different Representative Concentration Pathways (RCPs) developed by the IPCC (IPCC, 2014: Climate Change 2014: Synthesis
Report). An RCP describes a greenhouse gas (GHG) concentration trajectory resulting in different climate futures, and ultimately results in different risks and opportunities for Electrolux based
on this forecast.
2) See the Reporting Principles on page 99 for more technical detail on the Rapid Transition Scenario.
3) See the Reporting Principles on page 99 for more technical detail on the Changing Climate Scenario.
Major scenario impacts on the Electrolux value chain
The Rapid Transition and Changing Climate scenarios would
both have material impact on the entire Electrolux value chain.
However, their major impacts on the value chain would differ
slightly (see the illustration below).
MAJOR IMPACTS FROM THE TWO SCENARIOS ALONG THE VALUE CHAIN
Rapid Transition Scenario
Product
development
Suppliers
Electrolux
operations
Transport
Sales
Consumer use
End-of-Life
Climate Change Scenario
ELECTROLUX ANNUAL REPORT 2020
98 Climate-Related Financial Disclosures
Risk management
Electrolux has a thorough risk mapping and
decision-making process that manages all risks for
the Group. The two different climate scenarios result
in a variety of risks and opportunities for Electrolux
throughout its value chain.
Enterprise Risk Management
The Electrolux Enterprise Risk Management (ERM) framework
and related processes identify, mitigate, communicate and
report risks that can significantly affect the business. Electrolux
follows a risk mapping process for the collection and incorpora-
tion of risk information into decision making and governance
processes. The ERM includes climate-related risks and the
objective is to align the Climate Related Financial Disclosure
with the ERM. Climate-related risks usually have a longer time-
horizon than usual ERM-risk, with a shorter time-horizon.
The Rapid Transition Scenario
As a sustainability leader in its industry, Electrolux is well-
positioned to meet the demands for stringent product energy
legislation, carbon taxes and digitalization in the near future
– to continue to create long-term shareholder value. As
approximately 85% of an appliance’s climate footprint is in its
use phase, Electrolux can play a role in meeting the need for
energy efficient appliances that help mitigate the impact of
climate change.
Primary rapid transition risks
• Increased costs related to designing resource-efficient prod-
ucts – Electrolux has product development roadmaps with the
objective to meet forthcoming energy labelling standards,
such as the EU new labelling standards and stricter minimum
energy performance standards (MEPS) to be implemented
between 2021 and 2023.
• Carbon taxes – Electrolux is well prepared to meet the risks of
higher carbon taxes by driving resource and energy efficiency
throughout the value chain. Carbon taxes on finished goods
could also increase carbon import duties, such as the EU
‘ carbon border adjustment mechanism’.
Opportunities
• Industrial shift to renewable energy – Electrolux is already well
on its way to carbon neutral operations by 2030. According to
the projections in a study by Bloomberg New Energy Finance¹,
Electrolux will not be negatively affected in its operations by
the shift from fossil-based to renewable electricity. An industry
shift to renewable energy could therefore provide Electrolux
with a competitive advantage.
• Product efficiency – More stringent product legislation and
higher energy prices could drive the demand for energy
efficient Electrolux products in the market. The International
Monetary Fund (IMF) has concluded that a carbon tax of USD
75 per ton of CO2 would increase the average electricity price
across G20 countries by 43% .
• A growing market – The growing middle class, in particular in
Asia and Africa, will continue to expand the market for house-
hold appliances.
• Electrification – The IEA estimates that there is potential for 2.6
billion people to shift from wood burning stoves to using clean
cooking appliances. Electrolux can help meet this demand for
clean and efficient appliances.
The Changing Climate Scenario
In this scenario, Electrolux must adapt to a changing climate in
terms of more frequent and/or more severe weather systems
and greater chronic physical risks from changing climate condi-
tions. Electrolux has started to include “The Changing Climate
Scenario” in its loss prevention program - Blue Risk program - to
improve resilience of its own operations, supply chain and trans-
port systems, and plans to make more detailed assessments in
the coming years. Action on this insight will enable Electrolux to
continue to create long-term shareholder value.
Primary acute and chronic physical risks
• Electrolux operations – Recent internal assessments have not
found that Electrolux factories have significant risks related to
greater acute and chronic physical risks due to more frequent
and severe weather systems and changing climate conditions.
However, more detailed analyses will be conducted based on
reputable external sources, such as the IPCC:
-Acute physical risks – IPCC predict that the scenario will result
in greater acute physical risks, such as more frequent hur-
ricanes.
-Chronic physical risks – IPCC does not predict a significant
increase in chronic physical risks due to this scenario in the
next 30 years, although uncertainty is high.
• Electrolux suppliers – Significant risks exist among Electrolux
suppliers, although the company has a large amount of
flexibility in its supply chain, which will adapt to the changing
conditions to meet market needs as more resilient suppliers
survive and thrive.
• Transport systems – The global logistical systems Electrolux
relies on for the movement of its raw materials, components
and finished goods are thought to be resilient to acute and
chronic physical risks as alternative logistical arrangements
can always be made. However, more investigation is required.
Opportunities
• Consumer demand – the need for air conditioning is expected
to grow in a warmer world, particularly in Asia and Africa
with a growing middle class. Electrolux can meet this growing
market demand.
• A growing market – The growing middle class, in particular in
Asia and Africa, will continue to expand the market for house-
hold appliances.
• Electrification – The IEA estimates that there is potential for 2.6
billion people to shift from wood burning stoves to using clean
cooking appliances. Electrolux can help meet this demand for
clean and efficient appliances.
Future development
Electrolux will continue to develop its climate scenario analy-
ses and assess the potential impacts on its operations. Future
development includes:
• Integrating climate risks in the Group’s ERM
• Define climate risks for specific factory locations
• Update the Electrolux water risk using the WWF Water Risk
Filter for Electrolux factories
1) International Monetary Fund (2019). Fiscal Monitor, How to Mitigate Climate Change
page 21.
ELECTROLUX ANNUAL REPORT 2020
Climate-Related Financial Disclosures 99
CLIMATE-RELATED RISKS AND IMPACTS OF THE RAPID TRANSITION AND THE CHANGING CLIMATE SCENARIOS
Scenario
The Rapid Transition Scenario
The Changing Climate Scenario
Risk Area
Product energy
legislation
Carbon dioxide
price/tax
Physical Risk –
Acute
Physical Risk –
Chronic
Potential impact
on Electrolux
Transformation
investments
Increase in price
for raw materials
Interruptions in
manufacturing and
supply chain
Relocation of
manufacturing
Financial
Impact Area
Costs, Sales,
Reputation
Costs, Sales
Costs, Sales
Costs
Risk (0-3 years)
Emerging Risk (3-10 years)
Long-term Risk (10- years)
Metrics and Targets
Electrolux has comprehensive reporting systems that include
various metrics and targets to assess and manage relevant
climate-related risks and opportunities.
In 2020, Electrolux was included in the CDP climate A list for
the fifth time. Electrolux also reports in accordance with the GRI
Standards.
The following climate related KPIs are reported in the sepa-
• Greenhouse gas emissions intensity in ton CO2 per million SEK
(GRI 305-4)
• Reduction of GHG emissions (GRI 305-5)
• Emissions of ozone-depleting substances (GRI 305-6)
Science Based Target (Scope 1, 2, and 3)
• Electrolux CDP report (www.cdp.net)
rate Sustainability Report:
• Energy consumption within the organization (GRI 302-1)
• Direct and Indirect CO2 emissions, including fugitive emissions
(GRI 305-1, 305-2)
Details on the company’s overall climate performance are
found on page 89 in the Annual Report and detailed perfor-
mance is reported in the separate Electrolux Sustainability
Report 2020.
REPORTING PRINCIPLES
This section provides some additional technical detail behind the
scenarios and the report’s assumptions.
Electrolux has based its climate scenarios and impacts on two
different Representative Concentration Pathways (RCPs) devel-
oped by the IPCC (IPCC, 2014: Climate Change 2014: Synthesis
Report). An RCP describes a greenhouse gas (GHG) concentra-
tion trajectory resulting in different climate futures, and ultimately
results in different risks and opportunities for Electrolux based on
this forecast.
The Rapid Transition Scenario
The Rapid Transition Scenario is based on RCP 2.6, which would
involve rapidly declining emissions in the coming decades, resulting
in a global average temperature rise of approximately between
0.3-1.7 °C by 2100. For this scenario, the IEA concludes that over-
all CO2 emissions need to peak around 2020 and enter a steep
decline thereafter to achieve a 75% reduction by 2050. The building
sector, including appliances, will see a similar drop, mainly through
energy efficiency, renewable energy technologies and a shift to
low-carbon electricity. This means reducing carbon emissions by
an average of 6% per year to one-eighth of current levels by 2050.
At the same time, demand for electricity in the building sector
is expected to increase as a result of a growing consumer base,
as well as a rising demand for equipment such as air conditioners
and the replacement of gas and wood-burning stoves with electric
appliances. The IEA concludes :
• Significant policy efforts are needed for cooling equipment and
appliances to accelerate technological progress in these end
uses, particularly with substantial growth in appliance and air
conditioner (AC) ownership expected in the coming decade.
• Digitalization and smart demand-side management will further
reduce energy use.
A combination of stringent product energy legislation as well
as carbon dioxide taxes would be required, which would impact
on product development, supply base, operations and sales in
the appliance industry. Higher carbon dioxide taxes are recom-
mended by the IEA and in the EU Green Deal framework. Carbon
prices are expected to have an impact on energy intensive
industries such as power generation, transport, steel, aluminum
and plastics producers. Finished goods could also be impacted
through carbon import duties, such as the EU ‘carbon border
adjustment mechanism’.
The World Bank has estimated that carbon prices of at least
USD 40–80/tCO2 by 2020 and USD 50–100/tCO2 by 2030 are
required to cost-effectively reduce emissions in line with the tem-
perature goals of the Paris Agreement. In a report from the Interna-
tional Monetary Fund (IMF) , it was concluded that a carbon tax of
USD 50 per metric ton in advanced countries (G20) would lead to
ELECTROLUX ANNUAL REPORT 2020
an average electricity price increase of 33%, while a carbon tax of
USD 75 per metric ton would lead to an increase in price of 43%.
Today, prices for renewable and fossil-based electricity are
comparable, but prices are expected to decline for renewables by
around 50% over the next 10 years, while fossil-based electricity will
increase by 40% according to data from Bloomberg New Energy
Finance. With a USD 75 per metric ton carbon tax, the price of
natural gas, both for industry and households (mostly for heating
and cooking) would rise significantly, by 70% on average.
The Changing Climate Scenario
The Changing Climate Scenario is based on RCP 4.5, which would
involve slowly declining emissions resulting in approximatley
between 1.4-3.1°C temperature increase by 2100. The IPCC
has conducted risk assessments for each region, including the
potential for risk reduction through adaptation and mitigation, as
well as limits to adaptation. In the near term (2030–2040 or in 10
years), projected levels of global mean temperature increase are
not expected to diverge substantially between different emission
scenarios. However, the IPCC predicts that by the mid-century
(in 30 years), climate change will impact human health, with more
frequent hot and fewer cold temperature extremes over most land
areas. It is also very likely that heat waves will occur with a higher
frequency and longer duration.
The average intensity of tropical cyclones, the proportion of
Category 4 and 5 tropical cyclones and the associated average
precipitation rates are projected to increase with a 2°C global
temperature rise. Sea levels continue to rise at an increasing rate.
Extreme sea level events that are historically rare (once per century
in the recent past) are projected to occur frequently (at least once
per year) in many locations by 2050.
The Changing Climate Scenario will increase acute physical
risks due to more frequent and/or more severe weather systems,
such as hurricanes and floods. It will also increase chronic physical
risks from changing climate conditions, such as droughts and sea
level rise. These physical impacts pose risks for disruption in the
appliance industry, due to the global nature of its operations and
supply chain – particularly in the manufacturing of materials and
components that are situated in parts of the world that are more
likely to be affected by physical risks.
World Energy Outlook
The World Energy Outlook (WEO) , published annually by the
International Energy Agency (IEA), includes critical analysis and
descriptions of trends in energy demand and supply. It explores
possible scenarios, how they could develop and some of the main
uncertainties to predict the consequences of different choices and
what they mean for energy security, environmental protection and
economic development.
The IEA defines two scenarios:
• The Sustainable Development Scenario (SDS) – a deep decar-
bonization scenario that considers how people should gain
access to critical energy services while also meeting climate
goals.
• The Stated Policies Scenario (STEPS) – reflecting current policies
and plans.
The SDS Scenario is considered to reflect the Group’s Rapid Transi-
tion Scenario, while the STEPS Scenario is more in line with the
Changing Climate Scenario. The IEA report provides recommen-
dations to policy makers regarding sectors and product categories
in order to achieve the targets in the scenarios.
Disclosure limitations and future development
The following aspects have not been included in this TCFD Report:
• Growing consumer demand – driven by a growing middle class,
increasing global incomes, electricity access rates and owner-
ship of appliances and air conditioners.
• Price elasticity – consumer willingness to pay a higher price for
more efficient appliances as a result of more stringent energy
efficiency legislation.
• Mitigable risks – chronic physical risks will develop over time and
could be mitigated by taking action well before they have mate-
rialized to minimize negative impact.
Forward-looking statements
This report contains ‘forward-looking’ statements that reflect the
company’s current expectations. Although Electrolux believes that
the expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations
prove to be correct as they are subject to risks and uncertainties
that could cause the actual results to differ materially due to a vari-
ety of factors. These factors include, but are not limited to, changes
in consumer demand, changes in economic, market and com-
petitive conditions, supply and production constraints, currency
fluctuations, developments in product liability litigation, changes
in the regulatory environment and other government actions.
Forward-looking statements are only accurate as of when they
were formulated, and other than as required by applicable law, the
company undertakes no obligation to update any of them in light of
new information or future events.
1) IEA (2018). Perspectives for the Energy Transition: The Role of
Energy Efficiency.
2) The World Bank Group (2020)), State and Trends of Carbon
Pricing.
3) International Monetary Fund (2019). Fiscal Monitor, How to
Mitigate Climate Change. p21
4) IEA, The World Energy Outlook (WEO) 2019
Corporate Governance
Report 2020
Corporate governance report 101
Corporate governance report
Chairman's introduction
As a leading global appliance company, Electrolux
shapes living for the better by reinventing taste, care
and wellbeing experiences to make life more enjoyable
and sustainable for millions of people. Through the
Group’s different brands, we sell approximately 60 million
products in approximately 120 markets every year.
Our large installed base of approximately 400 million
products globally gives us high aftermarket sales
potential.
Corporate Governance Report
This Corporate Governance Report provides details of the over-
all governance structure of Electrolux, the interactions between
the formal corporate bodies, internal policies and procedures
as well as relevant control functions and reporting, which
ensures a robust global governance framework and strong
corporate culture.
Board's focus areas during the year
The year marked a milestone in Electrolux history with the distri-
bution of Electrolux Professional AB in March 2020, which was an
important step in reshaping Electrolux into a focused consumer
centric company well positioned to meet the current market
and drive product innovation in order to further deliver on our
profitable growth strategy.
The coronavirus pandemic has imposed unprecedented
challenges. However, the company has successfully mitigated
these challenges by e.g. effective cost savings and reprioritizing
capital expenditures. Both long-term and short-term actions
have been guided by Electrolux strategy to become a sharp,
consumer centric business enhancing consumer experiences.
The long-term strategy has enabled the company to capture
the change in consumer behavior induced by the pandemic
such as the increased focus on digitalization and the growing
online and e-commerce trend.
Electrolux continued to execute on the re-engineering program
during the year with extensive investments in automated and
modularized manufacturing in Brazil and North America to further
strengthen cost competitiveness and drive profitable growth.
Although a significant part of the first half year 2020 was
extremely challenging with an initial focus on securing access to
liquidity if the markets would not recover quickly the overall out-
come for the full year showed increased earnings and margins
with a very strong cash flow. I am pleased that a dividend pay-
ment could be made during the year and can also report that
Electrolux in 2020, as one of the first companies listed on Nas-
daq Stockholm, implemented a long-term incentive program for
senior executives which includes a sustainability target.
The pandemic has also affected the Board’s work, not allow-
ing travel or physical meetings. However, by adapting the ways
of working by, for example, the use of digital tools, the Board’s
work has progressed well and the annual Board evaluation sup-
ports this picture.
I would like to take this opportunity to thank my fellow Board
members for good cooperation, constructive contributions and
engaged work. I would also like to thank Electrolux employees
for their exceptional work efforts during an exceptionally chal-
lenging year.
Staffan Bohman
Chairman of the Board
ELECTROLUX ANNUAL REPORT 2020
Corporate Governance
Report 2020
102 Corporate governance report
Governance in Electrolux
Electrolux aims at implementing strict norms and efficient gover-
nance processes to ensure that all operations create long-term
value for shareholders and other stakeholders. This involves the
maintenance of an efficient organizational structure, systems for
internal control and risk management and transparent internal
and external reporting.
The Electrolux Group comprises approximately 130 com-
panies with sales in approximately 120 markets. The parent
company of the Group is AB Electrolux, a public Swedish limited
liability company. The company’s shares are listed on Nasdaq
Stockholm.
The governance of Electrolux is based on the Swedish
Companies Act, Nasdaq Stockholm’s Nordic Main Market
Rulebook for issuers of Shares ("Rulebook for Issuers") and the
GOVERNANCE STRUCTURE
Swedish Code of Corporate Governance (the “Code”), as well
as other relevant Swedish and foreign laws and regulations.
The Code is published on the website of the Swedish Cor-
porate Governance Board, which admini strates the Code:
www.corporategovernanceboard.se
This corporate governance report has been drawn up as a
part of Electrolux application of the Code. Regarding deviations
from the Code in 2020 see "Deviations from the Code" on page
111. There has been no infringement by Electrolux of applicable
stock exchange rules and no breach of good practice on the
securities market reported by the disciplinary committee of
Nasdaq Stockholm or the Swedish Securities Council in 2020.
Below is Electrolux formal governance structure.
Shareholders
by the AGM
External Audit
Board of
Directors
Nomination
Committee
Remuneration
Committee
Audit Committee
Group Internal Audit
President and Group
Management
Business
area Boards
Internal Bodies
Major external regulations
• Swedish Companies Act.
• Rulebook for issuers.
• Swedish Code of Corporate Governance.
Major internal regulations
• Articles of Association.
• Board of Directors’ working procedures.
• Policies for information, finance, credit, accounting manual, etc.
• Processes for internal control and risk management.
• Code of Conduct, Anti-Corruption Policy and Workplace Policy.
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing
experiences for millions of people around the world, always striving to be at the forefront of sustainability in society through our solutions and
operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120
markets every year. In 2020, Electrolux had sales of SEK 116bn and employed 48,000 people around the world. For more information go to
www.electroluxgroup.com
AB Electrolux (publ) is registered under number 556009-4178 with the Swedish Companies Registration Office. The registered office of the Board of
Directors is in Stockholm, Sweden. The address of the Group headquarters is S:t Göransgatan 143, SE-105 45 Stockholm, Sweden.
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 103
Highlights 2020
• Re-election of Staffan Bohman as Chairman of the Board.
• Election of two new Board members, Henrik Henriksson and Karin Overbeck.
• Distribution of Electrolux Professional AB to the shareholders of Electrolux.
• Performance-based, long-term incentive program for senior management with a new
sustainability target.
Shares and shareholders
The Electrolux share is listed on Nasdaq Stockholm. At year-
end 2020, Electrolux had approximately 59,400 shareholders
according to Monitor by Modular Finance AB. Of the total share
capital, 60% was owned by Swedish institutions and mutual
funds, 33% by foreign investors and 7% by Swedish private inves-
tors, see below. Investor AB is the largest shareholder, holding
16.4% of the share capital and 28.4% of the voting rights. The ten
largest shareholders accounted for 48.3% of the share capital
and 57.6% of the voting rights in the company.
Voting rights
The share capital of AB Electrolux consists of Class A shares and
Class B shares. One A share entitles the holder to one vote and
one B share to one-tenth of a vote. Both A shares and B shares
entitle the holders to the same proportion of assets and earn-
ings and carry equal rights in terms of dividends. Owners of A
shares can request to convert their A shares into B shares. Con-
version reduces the total number of votes in the company. As of
December 31, 2020, the total number of registered shares in the
company amounted to 308,920,308 shares, of which 8,192,539
were Class A shares and 300,727,769 were Class B shares. The
total number of votes in the company was 38,265,316. Class B
shares represented 78.6% of the voting rights and 97.3% of the
share capital.
Dividend policy
Electrolux target is for the dividend to correspond to at least 30%
of the income for the period. For a number of years, the dividend
level has been considerably higher than 30%.
Ahead of the Annual General Meeting (AGM) in March 2020
the Board withdrew the dividend proposal for the financial year
2019 due to the uncertain situation with the coronavirus pan-
demic. However, in September 2020 the situation had improved
significantly and the Board announced its proposal to reinstate
a dividend for the finacial year 2019 of SEK 7.00 per share which
was resolved upon by an Extraordinary General Meeting (EGM)
in November, 2020.
Shareholders
meeting
General Meetings of shareholders
The decision-making rights of share-
holders in Electrolux are exercised at
shareholders’ meetings. The AGM of AB Electrolux is held in
Stockholm, Sweden, during the first half of the year.
Extraordinary General Meetings may be held at the discretion
of the Board or, if requested, by the auditors or by shareholders
owning at least 10% of all shares in the company.
Participation in decision-making requires the share holder’s
presence at the meeting, either personally or by proxy. In addi-
tion, the shareholder must be registered in the share register by
a stipulated date prior to the meeting and must provide notice of
participation in the manner prescribed. Additional requirements
for participation apply to share holders with holdings in the form of
American Depositary Receipts (ADR) or similar certificates. Hold-
ers of such certificates are advised to contact the ADR depositary
bank, the fund manager or the issuer of the certificates in good
time before the meeting in order to obtain additional information.
Individual shareholders requesting that a specific issue be
included in the agenda of a shareholders’ meeting can nor-
mally request the Electrolux Board to do so. The last date for
making such a request for the respective meeting will be pub-
lished on the Group’s website.
Decisions at the meeting are usually taken on the basis
of a simple majority. However, as regards certain issues, the
Swedish Companies Act stipulates that proposals must be
approved by shareholders representing a larger number of the
votes cast and the shares represented at the meeting.
Annual General Meeting 2020
The 2020 AGM was held at the Stockholm Waterfront Congress
Centre in Stockholm, Sweden, on March 31, 2020. 693 share-
holders representing a total of 50.6% of the share capital and
63.3% of the votes were represented at the AGM. In order to limit
the risk for further spreading of the coronavirus a number of
actions were taken to minimize the risk for those who were pre-
sesent at the AGM and also to limit the number of participants
physically present. For example the entire AGM was broad-
casted live via the Group’s website
www.electroluxgroup.com/corporate-governance.
OWNERSHIP STRUCTURE
ATTENDANCE AT AGMS 2016–2020
Swedish institutions and mutual funds, 60%
Foreign investors, 33%
Swedish private investors, 7%
Source: Monitor by Modular Finance AB. Compiled
and processed data from various sources, including
Euroclear, Morningstar and the Swedish Financial
Supervisory Authority (Finansinspektionen)
as per December 31, 2020.
The foreign ownership was 33% at year-end 2020 and 33% at year-end 2019.
Foreign investors are not always recorded in the share register. Foreign banks and
other custodians may be registered for one or several customers’ shares, and the
actual owners are then usually not displayed in the register. For additional information
regarding the ownership structure, see above.
The information on ownership structure is updated quarterly on the Group’s website:
www.electroluxgroup.com/corporate-governance
ELECTROLUX ANNUAL REPORT 2020
%
75
60
45
30
15
0
% of share capital
% of votes
Shareholders
ATTENDANCE
1,200
1,000
800
600
400
200
16
17
18
19
20
693 shareholders representing a total of 50.6% of the share capital and 63.3% of
the votes were present at the 2020 AGM.
104 Corporate governance report
Decisions at the Annual General Meeting 2020 included:
• Re-election of the Board members Staffan Bohman, Petra
Hedengran, Ulla Litzén, Fredrik Persson, David Porter,
Jonas Samuelson and Kai Wärn. Hasse Johansson and
Ulrika Saxon declined re-election.
• Election of Henrik Henriksson and Karin Overbeck as new
Board members.
• Re-election of Staffan Bohman as Chairman of the
Board.
• Re-election of Deloitte AB as auditors.
• Remuneration to the Board members.
• Approval of remuneration guidelines for Electrolux
Group Management.
• Authorization to acquire own shares and to transfer
own shares on account of company acquisitions and to
cover costs that may arise as a result of the share pro-
gram for 2018.
The meeting was held in Swedish, with simultaneous interpreta-
tion into English. Due to the situation with the coronavirus pan-
demic only a limited number of Board members were present
together with the Group's auditor.
Extraordinary General Meeting February 2020
An EGM of AB Electrolux was held on Friday, February 21, 2020,
at AB Electrolux headquarter, S:t Göransgatan 143, Stockholm,
Sweden. The EGM resolved to distribute all shares in Electrolux
Professional AB to the shareholders of AB Electrolux.
Extraordinary General Meeting November 2020
An EGM of AB Electrolux was held on Tuesday, November 3,
2020. The EGM was carried out by means of postal voting only
without the possibility to participate physically. The meeting
resolved on a dividend for the fiancial year 2019 of SEK 7.00 per
share and on the implementation of a performance based long-
term share program for 2020 which included a new sustainability
target. The EGM also resolved on amendements to the articles
of association.
Annual General Meeting 2021
The next AGM of AB Electrolux will be held on Thursday, March
25, 2021. Due to the coronavirus pandemic, the Board of Direc-
tors has decided that the AGM should be conducted without
the physical presence of shareholders, representatives or third
parties and that the shareholders before the meeting should be
able to exercise their voting rights only by voting in advance,
so-called postal voting. However, the shareholders will be able
to ask questions in writing ahead of the meeting.
For additional information on the next AGM and how to register attendance, see page 123.
The AGM resolves upon:
• The adoption of the Annual Report.
• Dividend.
• Election of Board members and, if applicable, auditors.
• Remuneration to Board members and auditors.
• Guidelines for remuneration to Group Management.
• Remuneration Report.
• Other important matters.
Nomination
Committee
Nomination Committee
The AGM resolves upon the nomination
process for the Board of Directors and the
auditors. The AGM 2011 adopted an instruction for the Nomina-
tion Committee which applies until further notice. The instruc-
tion involves a process for the appointment of a Nomination
Committee comprised of six members. The members should be
one representative of each of the four largest shareholders, in
terms of voting rights that wish to participate in the Committee,
together with the Chairman of the Electrolux Board and one
additional Board member.
The composition of the Nomination Committee shall be
based on shareholder statistics from Euroclear Sweden AB as of
the last banking day in August in the year prior to the AGM and
on other reliable shareholder information which is provided to
the company at such time. The names of the shareholders and
their representatives shall be announced as soon as they have
been appointed. If the shareholder structure changes during
the nomination process, the composition of the Nomination
Committee may be adjusted accordingly.
The Nomination Committee is assisted in preparing
proposals for auditors by the company’s Audit Committee and
the Nomination Committee’s proposal is to include the Audit
Committee’s recommendation on the election of auditors.
The Nomination Committee’s proposals are publicly
announced no later than on the date of notification of the
AGM. Shareholders may submit proposals for nominees to the
Nomination Committee.
Nomination Committee for the AGM 2020
The Nomination Committee for the AGM 2020 was comprised
of six members. Johan Forssell of Investor AB led the Nomination
Committee’s work.
For the proposal for the AGM 2020, the Nomination
Committee made an assessment of the composition and size of
the current Board as well as the Electrolux Group’s operations.
Areas of particular interest were Electrolux strategies and goals
and the demands on the Board that are expected from the
Group’s positioning for the future. The Nomination Committee
applied rule 4.1 of the Code as diversity policy in its nomination
work. The Nomination Committee considered that a breadth
and variety as regards age, nationality, educational back-
ground, gender, experience, competence and term of office is
represented among the Board members.
The Nomination Committee proposed re-election of all Board
members except Hasse Johansson and Ulrika Saxon who had
declined re-election. The Nomination Committee also proposed
Henrik Henriksson and Karin Overbeck as new Board members
and re-election of Staffan Bohman as Chairman of the Board.
After the election at the AGM 2020, three out of eight Board
members elected at the shareholders’ meeting are women (in
this calculation, the President has not been included in the total
number of Board members).
The Nomination Committee also proposed, in accordance
with the recommendation by the Audit Committee, re-election
The Nomination Committee’s tasks include preparing
a proposal for the next AGM regarding:
• Chairman of the AGM.
• Board members.
• Chairman of the Board.
• Remuneration to Board members.
• Remuneration for committee work.
• Amendments of instructions for the Nomination Committee,
• Auditors and auditors’ fees, when these matters are to be decided
if deemed necessary.
by the following AGM.
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 105
Electrolux but not, in his capacity as President and CEO, in rela-
tion to the company and the administration of the company.
Jonas Samuelson has no major shareholdings, nor is he a
part-owner in companies having significant business relations
with Electrolux. Jonas Samuelson is the only member of Group
Management with a seat on the Board.
The Board’s tasks
One of the main tasks of the Board is to manage the Group’s
operations in such a manner as to assure the owners that their
interests in terms of a long-term profitable growth and value
creation are being met in the best possible manner. The Board’s
work is governed by rules and regulations including the Swedish
Companies Act, the Articles of Association, the Code and the
working procedures established by the Board. The Articles of
Association of Electrolux are available on the Group’s website:
www.electroluxgroup.com/corporate-governance
Working procedures and Board meetings
The Board determines its working procedures each year and
reviews these procedures as required. The working procedures
describe the Chairman’s specific role and tasks, as well as the
responsibilities delegated to the committees appointed by the
Board.
In accordance with the procedures and the Code, the
Chairman shall among other things:
• Organize and distribute the Board’s work.
• Ensure that the Board discharges its duties and has relevant
knowledge of the company.
• Secure the efficient functioning of the Board.
• Ensure that the Board’s decisions are implemented efficiently.
• Ensure that the Board evaluates its work annually.
The working procedures for the Board also include detailed
instructions to the President and other corporate functions
regarding issues requiring the Board’s approval. Among other
things, these instructions specify the maximum amounts that
various decision-making functions within the Group are author-
ized to approve as regards credit limits, capital expenditure and
other expenditure.
The working procedures stipulate that the meeting for the
formal constitution of the Board shall be held directly after the
AGM. Decisions at this statutory meeting include the election
of members of the committees of the Board and authorization
to sign on behalf of the company. In addition to the statutory
Board meeting, the Board normally holds seven other ordinary
meetings during the year. Four of these meetings are to be held
in conjunction with the publication of the Group’s full-year report
and interim reports. One or two meetings are to be held in
connection with visits to Group operations. Additional meetings,
including telephone conferences, are held when necessary.
of Deloitte AB as the company’s auditors for the period until the
end of the AGM 2021.
A report regarding the work of the Nomination Committee
was included in the Nomination Committee’s explanatory state-
ment that was published before the AGM 2020. Further informa-
tion regarding the Nomination Committee and its work can be
found on the Group’s website:
www.electroluxgroup.com/corporate-governance
Nomination Committee for the AGM 2021
The Nomination Committee for the AGM 2021 is based on the
owner ship structure as of August 31, 2020, and was announced
in a press release on September 22, 2020.
The Nomination Committee’s members are:
• Johan Forssell, Investor AB, Chairman
• Carina Silberg, Alecta
• Marianne Nilsson, Swedbank Robur Funds
• Tomas Risbecker, AMF - Försäkring och Fonder
• Staffan Bohman, Chairman of Electrolux
• Fredrik Persson, Board member of Electrolux
Board of
Directors
The Board of Directors
The Board of Directors has the overall
responsibility for Electrolux organization
and administration.
Composition of the Board
The Electrolux Board is comprised of nine members without
deputies, who are elected by the AGM, and three members with
deputies, who are appointed by the Swedish employee organi-
zations in accordance with Swedish labor law.
The AGM elects the Chairman of the Board. Directly after
the AGM, the Board holds a meeting for formal constitution at
which the members of the committees of the Board are elected,
among other things. The Chairman of the Board of Electrolux is
Staffan Bohman.
All current members of the Board elected by the AGM, except
for the President, are non-executive members. Two of the nine
Board members, who are elected by the AGM, are not Swedish
citizens.
For additional information regarding the Board of Directors, see pages 112–113. The
information is updated regularly at the Group’s website: www.electroluxgroup.com
Independence
The Board is considered to be in compliance with the Swedish
Companies Act's and the Code's requirements for independ-
ence. The assessment of each Board member’s independence is
presented in the table on page 113.
All Directors except for Petra Hedengran and Jonas
Samuelson have been considered independent. Petra Heden-
gran has been considered independent in relation to the com-
pany and the administration of the company, but not in relation
to major shareholders of Electrolux. Jonas Samuelson has been
considered independent in relation to major shareholders of
The Board deals with and decides on Group-related issues
such as:
• Main goals.
• Strategic orientation.
• Essential issues related to financing, investments, acquisitions and
• Follow-up and control of operations, communication and organiza-
divestments.
tion, including evaluation of the Group’s operational and sustainability
management.
• Appointment of and, if necessary, dismissal of the President.
• Overall responsibility for establishing an effective system of internal
control and risk management as well as a satisfactory process for
monitoring the company’s compliance with relevant laws and other
regulations as well as internal policies.
Remuneration to the Board of Directors 2018–2020
(applicable as from the respective AGM)
SEK
2020
2019
2018
Chairman of the Board
2,200,000 2,200,000 2,150,000
Board member
Chairman of the Audit
Committee
640,000
640,000
600,000
280,000
280,000
260,000
Member of the Audit Committee
160,000
160,000
140,000
Chairman of the Remuneration
Committee
Member of the Remuneration
Committee
150,000
150,000
125,000
100,000
100,000
75,000
ELECTROLUX ANNUAL REPORT 2020
106 Corporate governance report
Key focus areas for the Board during 2020
• Effects and impacts of the coronavirus pandemic.
• Adapting Electrolux strategy and business model to
global industry drivers such as increased consumer
power, digitalization, sustainability, consolidation,and a
growing middle class.
• Dividend payment for the financial year 2019.
• Continued focus on the new organizational structure
focusing on consumer experiences.
• The listing and distribution of Electrolux Professional AB.
• Continued focus on the re-engineering program with
investments in Brazil and North America.
• Global streamlining measures to improve efficiency and
sharpen the consumer experience organization.
The Board’s work in 2020
During the year, the Board held twelve meetings. The attend-
ance of each Board member at these meetings is shown in the
table on page 113.
All Board meetings during the year followed an agenda,
which, together with the documentation for each item on the
agenda, was sent to Board members in advance of the meet-
ings. Electrolux General Counsel serves as secretary at the
Board meetings.
Each scheduled Board meeting includes a review of the
Group’s results and financial position, as well as the outlook for
the forthcoming quarters, as presented by the President. The
meetings also deal with investments and the establishment of
new operations, as well as acquisitions and divestments. The
Board decides on all investments exceeding SEK 100m and
receives reports on all investments exceeding SEK 25m.
Normally, the head of a business area also reviews a
current strategic issue at the meeting. For an overview of how
the Board’s work is spread over the year, see the table on
pages 106–107.
Ensuring quality in financial reporting
The working procedures determined annually by the Board
include detailed instructions on the type of financial reports and
similar information which are to be submitted to the Board. In
addition to the full-year report, interim reports and the annual
report, the Board reviews and evaluates comprehensive finan-
cial information regarding the Group as a whole and the entities
within the Group.
The Board also reviews, primarily through the Board’s Audit
Committee, the most important accounting principles applied
by the Group in financial reporting, as well as major changes in
these principles. The tasks of the Audit Committee also include
reviewing reports regarding internal control and financial
reporting processes, as well as internal audit reports submitted
by the Group’s internal audit function, Group Internal Audit.
The Group’s external auditors report to the Board as
necessary, but at least once a year. A minimum of one such
meeting is held without the presence of the President or any
other member of Group Management. The external auditors
also attend the meetings of the Audit Committee.
The Audit Committee reports to the Board after each of its
meetings. Minutes are taken at all meetings and are made
available to all Board members and to the auditors.
Board work evaluation
The Board evaluates its work annually with regard to working
procedures and the working climate, as well as regards the
focus of the Board work. This evaluation also focuses on access
to and requirements of special competence in the Board. The
evaluation is a tool for the development of the Board work and
also serves as input for the Nomination Committee’s work. The
evaluation of the Board is each year initiated and lead by the
Chairman of the Board. The evaluation of the Chairman is led by
one of the other members of the Board. Evaluation tools include
questionnaires and discussions.
In 2020, Board members responded to written question-
naires. As part of the evaluation process, the Chairman also had
individual discussions with Board members. The evaluations
were discussed at a Board meeting.
The result of the evaluations was presented for the
Nomination Committee.
Fees to Board members
Fees to Board members is determined by the AGM and dis-
tributed to the Board members who are not employed by
Electrolux. The fees to the Chairman and the Board members
remained unchanged during 2020, see page 105.
The Nomination Committee has recommended that Board
members appointed by the AGM acquire Electrolux shares and
that these are maintained as long as they are part of the Board.
A shareholding of a Board member should after five years
correspond to the value of one gross annual fee.
Board members who are not employed by Electrolux are
not invited to participate in the Group’s long-term incentive
programs for senior managers and key employees.
For additional information on remuneration to Board members, see Note 27.
OVERVIEW OF VARIOUS ITEMS ON THE BOARD’S AGENDA AND COMMITTEE MEETINGS 2020
• Q4, Consolidated results.
• Report by external auditors.
• Dividend.
• Proposals for the AGM.
Statutory Board meeting:
• Appointment of committee members.
• Signatory powers.
Ordinary Board meetings
Audit Committee
Remuneration Committee
•
•
•
Jan
•
Feb
•
•
March
• Q1 Quarterly
financial statements.
•
•
Apr
May
June
July
Aug
Oct
Nov
Dec
•
•
•
•
•
•
•
•
Sep
•
•
•
Each scheduled Board meeting included a review of the Group’s results and financial position, as well as the outlook for the forthcoming quarters.
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 107
Remuneration
Committee
Audit Committee
Committees of the Board
The Board has established a Remunera-
tion Committee and an Audit Committee.
The major tasks of these committees are
preparatory and advisory, but the Board may delegate deci-
sion-making powers on specific issues to the committees. The
issues considered at committee meetings shall be recorded in
minutes of the meetings and reported at the following Board
meeting. The members and Chairmen of the committees are
appointed at the statutory Board meeting following election
of Board members.
The Board has also determined that issues may be referred
to ad hoc committees dealing with specific matters.
Remuneration Committee
One of the Remuneration Committee’s primary tasks is to
propose guidelines for the remuneration to the members of
Group Management. The Committee also proposes changes
in remuneration to the President, for resolution by the Board,
and reviews and resolves on changes in remuneration to other
members of Group Management on proposal by the President.
The Remuneration Committee shall also review the Board's
report on remuneration pursuant to Chapter 8, Section 53 a of
the Swedish Companies Act ("Remuneration Report")
The Committee has consisted of the following three Board
members: Petra Hedengran (Chairman), Staffan Bohman
and Kai Wärn. At least two meetings are convened annually.
Additional meetings are held as needed.
In 2020, the Remuneration Committee held five meetings.
The attendance of each Board member at these meetings is
shown in the table on page 113. Significant issues addressed
include resolution on remuneration to new members of
Group Management, review and resolution on changes in the
remuneration to members of Group Management, follow-up
and evaluation of previously approved long-term incentive
programs and remuneration guidelines for Group Management,
review of the Remuneration Report for 2020 and review and
preparation of long-term incentive program and for 2021. The
Head of Human Resources and Communication participated in
the meetings and was responsible for meeting preparations.
Audit Committee
The main task of the Audit Committee is to oversee the processes
of Electrolux financial reporting and internal control in order to
secure the quality of the Group’s external reporting. The Audit
Committee is also tasked with supporting the Nomination
Committee with proposals when electing external auditors.
The Audit Committee has consisted of the following four
Board members: Ulla Litzén (Chairman), Staffan Bohman, Petra
Hedengran and Fredrik Persson. The external auditors report to
the Committee at each ordinary meeting. At least three meet-
ings are held annually. Additional meetings are held as needed.
In 2020, the Audit Committee held eight meetings. The attend-
ance of each Board member at these meetings is shown in the
table on page 113. Electrolux managers have also had regular
contacts with the Committee Chairman between meetings
regarding specific issues. The Group’s Chief Financial Officer
and from time to time other senior management members have
participated in the Audit Committee meetings.
Management.
The Remuneration Committee’s tasks include for example:
• To prepare and evaluate remuneration guidelines for Group
• To prepare and evaluate targets and principles for variable
• To prepare terms for pensions, notices of termination and severance
• To prepare and evaluate Electrolux long-term incentive programs.
• To review the Remuneration Report
pay as well as other benefits for Group Management.
compensation.
management, concerning the financial reporting.
The Audit Committee’s tasks include for example:
• To review the financial reporting.
• To monitor the effectiveness of the internal control, including risk
• To follow up the activities of the Group Internal Audit as regards to
organization, recruiting, budgets, plans, results and audit reports.
• To review and approve certain credit limits.
• To keep informed of the external audit and the quality control
performed by the Supervisory Board of Public Accountants and to
evaluate the work of the external auditors.
• To inform the Board of the outcome of the external audit and explain
how the audit contributed to the reliability of the financial reporting as
well as the role of the Committee in this process.
engagements in other tasks than audit services.
• To review, and when appropriate, preapprove the external auditors’
• To evaluate the objectivity and independence of the external auditors.
• To support the Nomination Committee with proposals when electing
external auditors.
• Rules of procedure
of the Board.
• Board work evaluation.
• Q2 Quarterly
financial statements.
• Q3 Quarterly
financial statements.
Ordinary Board meetings
Audit Committee
Remuneration Committee
•
•
•
Jan
•
Feb
•
•
March
Apr
May
•
•
•
June
•
•
•
July
•
•
Sep
Aug
•
•
Oct
Nov
•
•
•
Dec
ELECTROLUX ANNUAL REPORT 2020
108 Corporate governance report
External Audit
External auditors
The AGM in 2020 re-elected Deloitte AB
(Deloitte) as the Group’s external auditors
for one year, until the AGM in 2021. The Nomination Committee's
proposal for re-election was based on the recommendation by
the Audit Committee. Authorized Public Accountant Jan Bernts-
son is the auditor in charge of Electrolux.
Deloitte provides an audit opinion regarding AB Electrolux,
the financial statements of the majority of its subsidiaries, the
consolidated financial statements for the Electrolux Group and
the administration of AB Electrolux. The auditors also conduct a
review of the report for the second quarter.
The audit is conducted in accordance with the Swedish
Companies Act, International Standards on Auditing (ISA) and
generally accepted auditing standards in Sweden.
Audits of local statutory financial statements for legal entities
outside of Sweden are performed as required by law or applica-
ble regulations in the respective countries, including issuance of
audit opinions for the various legal entities.
Deloitte
Audit fees
Audit-related fees
Tax fees
All other fees
Total fees to Deloitte
PwC1)
Audit fees
Audit fees to other audit firms
Total fees to auditors
2020
2019
2018
63
2
4
0
69
—
0
69
47
10
1
1
59
—
—
59
42
1
1
1
45
4
—
49
1) PricewaterhouseCoopers (PwC) was the Group's auditors until the 2018 Annual General
Meeting.
For details regarding fees paid to the auditors and their non-audit assignments in the Group,
see Note 28.
Internal Audit
Group Internal Audit
The internal audit function is responsible
for independent, objective assurance, in
order to systematically evaluate and propose improvements for
more effective governance, internal control and risk manage-
ment processes.
The process of internal control and risk management has
been developed to provide reasonable assurance that the
Group’s goals are met in terms of efficient operations, compli-
ance with relevant laws and regulations and reliable financial
reporting.
Internal audit assignments are conducted according to a
risk based plan developed annually and approved by the Audit
Committee. The audit plan is derived from an independent risk
assessment conducted by Group Internal Audit to identify and
evaluate risks associated with the execution of the company
strategy, operations, and processes. The plan is designed to
address the most significant risks identified within the Group and
its business areas. The audits are executed using a methodology
for evaluating the design and effectiveness of internal controls
to ensure that risks are adequately addressed and processes
are operated efficiently.
Opportunities for improving the efficiency in the governance
and internal control and risk management processes identified
in the internal audits are reported to responsible business area
management for action. A summary of audit results is provided
to the Audit Board and the Audit Committee, as is the status of
management’s implementation of agreed actions to address
findings identified in the audits.
For additional information on internal control, see pages 116–117. For additional information
on risk management, see Note 1, Note 2 and Note 18.
Company
Management of
Electrolux
Electrolux – a global leader with a purpose
to shape living for the better
Electrolux has a strategic framework that
connects a consumer experience focused
business model with a clear company purpose – Shape living for
the better. To achieve the purpose and drive profitable growth,
Electrolux uses a business model which focuses on creating
outstanding consumer experiences. By creating desirable solu-
tions and great experiences that enrich peoples’ daily lives and
the health of the planet, Electrolux wants to be a driving force
in defining enjoyable and sustainable living. Focus is to invest in
innovations that are most relevant for creating the outstanding
consumer experience to make great tasting food, the best care
for clothes and to increase wellbeing in the home.
Targeted growth and optimization of the product portfolio
to the most profitable product categories and products with
distinct consumer benefits, will strengthen the presence of
Electrolux in the product categories and channels where the
Group is most competitive. This is supported by a strong foun-
dation of Operational Excellence and Talent, Teamship and
Continuous Improvement, as well as three important transfor-
mational drivers; Emerging markets acceleration, Digital trans-
formation and Sustainable development. Electrolux objective is
to grow with consistent profitability, see the financial targets on
page 109.
A sustainable business
Sustainability leadership is crucial to realizing the Electrolux
strategy for long-term profitable growth. In 2020, Electrolux
most resource-efficient products represented 26% of products
sold and 36% of gross profit.
The company takes a consistent approach to sustain ability
in the countries where Electrolux operates. Understanding and
engaging in challenges such as climate change, creating ethi-
cal and safe workplaces, and adopting a responsible approach
to sourcing and restructuring are important for realizing the
business strategy.
Electrolux has a Code of Conduct, which sets out the framework
of how Electrolux shall conduct its operations in ethical and sus-
tainable ways. The Code of Conduct, which has been approved
by the Board, serves as an introduction to the Group Policies,
and its purpose is to increase the clarity on what the company's
principles mean for the employees. There is regular training and
communication of the Code and Group Policies, and in 2020
online trainings in the Anti-corruption Policy and the Workplace
Policy were rolled out to office based employees. At year end the
completion rates were 79% and 66% for the Anti-corruption and
Workplace trainings respectively.
The Ethics Program encompasses a global whistleblowing
system – Ethics Helpline – through which employees can report
suspected misconduct in local languages. Reports may be sub-
mitted anonymously if legally permitted. The largest categories
of reports in 2020 related to workplace conduct, verbal abuse
and other types of disrespectful behavior.
Taste, Care
& Wellbeing
Innovation
Branded Star
Products with
Preferred
Partners
Outstanding
Consumer
Experiences
Engaging
Ownership
& Quality
Experience
Operational Excellence
Talent, Teamship & Continuous Improvement
Emerging Markets
Acceleration
Digital
Transformation
Sustainable
Development
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 109
disruptive events related to natural hazards. Annual risk surveys
and visits are performed, and a consolidation of the results is
reported to the ERM Board.
ERM as part of the Group’s risk management
Electrolux has implemented an Enterprise Risk Management
(“ERM”) program which covers Electrolux business areas as well
as global functions. It is overseen by Group Management and
the ERM Board, which is also responsible for securing appropri-
ate insurance coverage for insurable risks and assesses and
facilitates the prioritization of the Group risks.
The ERM framework includes processes aimed to identify and
mitigate as well as communicate and report risks with a spe-
cial focus on key risks that can significantly affect the business.
Electrolux follows a risk mapping process which is a manage-
ment tool for formal collection and incorporation of risk infor-
mation into decision making and governance processes. The
risk mappings are therefore a key part of Electrolux ERM and
help to increase the understanding that risk management is a
critical factor for decision making and for driving value. The core
of the risk mapping process is to identify and evaluate existing
and emerging risks, thus enabling the possibility of leveraging
risk and risk management options that extract value.
Risks are categorized in accordance with Electrolux Group
Risk Universe which includes the following risk categories:
strategic, external and internal risks. Strategic risks are risks that
can jeopardize the execution of the Group’s strategy and are
impacted by external factors such as industry shifts, macroe-
conomic developments or political instabilities. External risks
consist of natural hazards, geopolitical risks, market risks or
regulations, which can negatively impact the Group’s perfor-
mance. Internal risks mainly consist of operational risks such as
sustainability risks, cyber security risks, supply chain risks and
talent retention risks.
Electrolux also monitor emerging risks. They can either
develop from macro-level changes such as global warming,
consumer behavior or the introduction of AI – artificial intel-
ligence, or from risks that are closer to home (resulting from
industry/sector prospects and trends etc.).
The Group’s risk appetite is based on the impact on its strat-
egy that a risk would have if it materializes. Key risks are linked
to action plans to close risk management gaps and follow up
how risks are evolving after implementation of risk reducing
measures. Risk ownership for critical risks is assigned to business
area executives or individuals formally appointed to work with
ELECTROLUX TOTAL TAXES 2020
Employer tax & fees, 29.8 %
Corporate tax, 13.3%
Property tax, 1.4 %
Customs, 24.5%
Indirect tax, 25.3 %
Environmental tax & fees, 5.6%
Financial targets over a business cycle
The financial goals set by Electrolux aim to strengthen the
Group’s leading, global position in the industry and assist in
generating a healthy total yield for Electrolux shareholders.
The objective is growth with improved profitability.
• Sales growth of at least 4% annually.
• Operating margin of at least 6%.
• Capital turnover-rate of at least 4.
• Return on net assets >20%.
In line with the UN Guiding Principles on Business and Human
Rights, Electrolux conducts human rights risk assessments at
both global and local levels since 2016. The methodology
for the assessments focuses on identifying the risk of harming
people, as a direct or indirect result of Electrolux operations, and
includes corruption risks as well as opportunities to increase
local positive impacts. In 2020 a local impact assessment was
conducted of the manufacturing operations in Romania.
The Group’s sustainability performance strengthens relations
with investors and Electrolux is recognized as a leader in the
household durables industry. In 2020, Electrolux was included
in the Dow Jones Sustainability Index (DJSI) World and Europe
indexes and thereby ranks among the top 10% of the world’s 2,500
largest companies for social and environmental performance.
Read more about Electrolux sustainability work:
www.electroluxgroup.com/sustainability
Electrolux as a tax payer
One important aspect of Electrolux company purpose – Shape
living for the better – is to act as a good corporate citizen and
taxpayer wherever Electrolux operates.
Electrolux plays an important role in contributing to public
finances in all jurisdictions where the Group operates. The Group
has approximately 48,000 employees with sales in more than
120 markets.
Of Electrolux Group total tax contribution, as defined in the
below chart, corporate tax represented approximately 13% in
2020. Corporate income taxes are only a portion of the Group’s
total contribution to public finances in Electrolux markets. In
addition to corporate income taxes, Electrolux pays indirect
taxes, customs duties, property taxes, employee related taxes,
environmental charges and a number of other direct or indi-
rect contributions to governments. The total contribution to
public finances for 2020 amounted to approximately SEK 8.3bn
whereof approximately half related to emerging markets.
Electrolux most transparent contribution to public finances
around the world is corporate income taxes, see Note 10.
Corporate income taxes amounted to SEK 1.1bn in 2020, repre-
senting a global effective tax rate of the Group of 21.7%.
For more information on Electrolux tax policy, see:
www.electroluxgroup.com
Risk management
Active risk management is essential for Electrolux to drive
successful operations. The Group is impacted by various types
of risks.
The Group’s risk management approach follows a decentral-
ized structure, where all business areas are responsible for their
risk management. However, the Board of Directors is ultimately
responsible for Electrolux risk management. In addition to the
business areas, the Group has established internal bodies that
manage risk exposures on a regular basis. Examples of internal
bodies are the Enterprise Risk Management (ERM) Board, the
Ethics & Human Rights Steering Group, the Audit Board and the
Tax Board.
Insurance and loss prevention
Electrolux transfers part of its risks via tailored insurance pro-
grams. Insurable risks are continuously evaluated and moni-
tored by the ERM Board. The Group also own two captives to
ensure customized insurance solutions and costs efficiencies.
Electrolux loss prevention strategy is also widely developed,
to ensure that the Group assets have the right level of protection
against risks such as natural hazards, which could lead to prop-
erty losses and business interruption. The Group has established
loss prevention procedures and standards to be applied by
each Electrolux site. Business continuity plans are also elabo-
rated and regularly reviewed to ensure successful response to
ELECTROLUX ANNUAL REPORT 2020
110 Corporate governance report
specific risks. The approach ultimately supports a risk culture
that encourages engagement and accountability within the
organization
Management and company structure
Electrolux aims at implementing strict norms and efficient pro-
cesses to ensure that all operations create long-term value for
shareholders and other stakeholders. This involves the mainten-
ance of an efficient organizational structure, systems for inter-
nal control and enterprise risk management and transparent
internal and external reporting.
The Group has a decentralized corporate structure in which
the overall management of operational activities is largely per-
formed by the business area boards.
Electrolux operations are organized into four geographically
defined business areas.
Six group staff functions supports the business areas:
Finance, Legal Affairs, HR & Communications, Group IT, Group
Operations and Global Consumer Experience organization.
The Global Consumer Experience organization is globally
responsible for areas such as marketing, design, R&D, product
lines, digital consumer solutions and ownership experience.
There are also a number of internal bodies which are forums
that are preparatory and decision-making in their respective
areas, see chart below. Each body includes representatives
from concerned functions.
In order to fully take advantage of the Group’s global pres-
ence and economies of scale, the Group has established Group
Operations with the responsibility for purchasing, manufactur-
ing and quality.
President and
Group
Management
President and Group Management
Group Management currently includes the
President, the four business area heads
and five group staff heads. The President
is appointed by and receives instructions from the Board.
The President, in turn, appoints other members of Group
Management and is respon sible for the ongoing management
of the Group in accordance with the Board’s guidelines and
instructions. Group Management holds monthly meetings to
review the previous month’s results, to update forecasts and
plans and to discuss strategic issues.
A diversified management team
The Electrolux management team, with its extensive expertise,
diverse cultural backgrounds and experiences from various
markets in the world, forms an excellent platform for pursuing
profitable growth in accordance with the Group’s strategy.
Electrolux Group Management represents six different national-
ities. Most of them have previous experience of predominantly
multinational consumer goods companies.
In recent years, a number of major initiatives have been
launched aimed at better leveraging the unique, global position
of Electrolux. In several areas, global and cross-border orga-
nizations have been established to, for example, increase the
pace of innovation in product development, reduce complexity
in manufacturing and optimize purchasing.
Changes in Group Management
The following changes in the Group management have been
announced during 2020.
On March 16, 2020 it was announced that Adam Cich would
replace Dan Arler as new head of the business area Asia-Pacific,
Middle East and Africa with immediate effect. Adam Cich was
also appointed Executive Vice President.
On August 18, 2020 it was announced that Jan Brockmann
would resign from his position as Chief Operations Officer on
September 30, 2020. On September 16, 2020 it was announced
that Carsten Franke had been appointed new Chief Operations
Officer and Executive Vice President with effect from October 1,
2020.
For details regarding members of Group Management, see pages 114–115
The information is updated regularly at the Group’s website:
www.electroluxgroup.com
Key focus areas for the President and
Group Management in 2020
• Responding to the volatile environment caused by the
coronavirus pandemic.
• Continuing to drive sustainable consumer experience
innovation under sharpened brands.
• Strengthening e-commerce capabilities.
• Further developing the aftermarket business.
• Executing on re-engineering investment program, pri-
marily in North America and Latin America.
• Launching and implementing new sustainability frame-
work, For the better 2030.
• Implementing price increases to mitigate currency
headwinds, particularly in Latin America.
• Appointment of new Group Management members.
INTERNAL BODIES
President and Group
Management
Internal bodies
Insider & Disclosure
Committee
Enterprise Risk
Management Board
Ethics & Human Rights
Steering Group
Sustainability Board
Tax Board
Pension Board
Sourcing Board
Audit Board
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 111
Deviation
from the Code
Deviation from the Code
The Board of Directors proposed a
performance-based, long-term incentive
program for 2020 (LTI 2020) ahead of the AGM 2020. In light of
the then prevailing uncertainties due to the coronavirus pan-
demic the Board decided to withdraw the proposal for LTI 2020
together with the dividend proposal. The proposal for LTI 2020
was unilateraly withdrawn under exceptional circumstances.
Given that these circumstances no longer applied the Board
decided in September 2020 to convene an extraordinary gen-
eral meeting to resolve upon the reinstated dividend proposal
and the proposal for LTI 2020 corresponding to the proposal
that was withdrawn ahead of the AGM 2020. The LTI program is
a tool to align the interests of the senior executives and the inter-
ests of the shareholders, it is also an important component in the
executive remuneration. Furthermore, LTI 2020 includes a new
performance measure which refers to reduction of CO2 in the
Group’s business. By implementing the program the importance
of prioritizing this area to the senior management members is
also emphasized. In light of the above it was determined to be in
the interest of the company and the shareholders to implement
the program during 2020.
The extraordinary general meeting held on November 3,
2020 resolved to approve the Board’s proposal for LTI 2020. The
performance period for the financial targets are the financial
year 2020 and for the sustainability target the three financial
years 2020-2022 and any allocation of shares will take place in
the first half of 2023. Although the performance periods started
on January 1, 2020, the participants were not invited to the
program until November 2020 following the general meeting’s
decision. In the event this would mean that the duration of the
program would be considered to be shorter than three years,
the implementation of the program would constitute a devia-
tion from the Code’s rule 9.7, the reasons for the deviation are
referred to above.
Business
Area Boards
Business areas
The business area heads are also mem-
bers of Group Management and have
responsibility for the operating income and net assets of their
respective business area.
The overall management of the business areas is the respon-
sibility of business area boards, which meet quarterly. The Presi-
dent is the chairman of all such boards. The business area board
meetings are attended by the President, the management of
the respective business area and the group staff heads. The
business area boards are responsible for monitoring on-going
operations, establishing strategies, determining business area
budgets and making decisions on major investments.
Remuneration
Remuneration to
Group Management
Remuneration guidelines for Group
Management are resolved upon by the AGM, based on the
proposal from the Board. Remuneration to the President is
then resolved upon by the Board, based on proposals from
the Remuneration Committee. Changes in the remuneration
to other members of Group Management is resolved upon by
the Remuneration Committee, based on proposals from the
President, and reported to the Board of Directors.
Electrolux shall strive to offer total remuneration that is fair
and competitive in relation to the country of employment or
region of each Group Management member. The remuneration
terms shall emphasize “pay for performance”, and vary with the
performance of the individual and the Group.
Remuneration may comprise of:
• Fixed compensation.
• Variable compensation.
• Other benefits such as pension and insurance.
Following the “pay for performance” principle, variable compen-
sation shall represent a significant portion of the total compen-
sation opportunity for Group Management. Variable compensa-
tion shall always be measured against pre-defined targets and
have a maximum above which no pay-out shall be made. The
targets shall principally relate to financial performance.
Each year, the Board of Directors will evaluate whether or
not a long-term incentive program shall be proposed to the
AGM. The EGM in November 2020 decided on a long-term share
program for 2020 ("LTI 2020") for up to 350 senior managers and
key employees. LTI 2020 includes a new CO2 reduction perfor-
mance target.
For additional information on remuneration, remuneration guidelines, long-term
incentive programs and pension benefits, see Note 27.
TIME-LINE FOR THE LONG-TERM INCENTIVE PROGRAM FOR SENIOR MANAGEMENT 2020
2020
2021
2022
2023
Performance period CO2 reduction
Performance period
financial targets
Start
1
2
3
Year
The calculation of the number of per-
formance shares, if any, is connected to
three performance targets for the Group
established by the Board; (i) earnings
per share, (ii) return on net assets, for the
2020 financial year, and (iii) CO2 reduc-
tion for the financial years 2020-2022.
Allotment of performance shares, if any,
to the participants will be made in 2023.
Invitations to
participants in
the program.
Performance
shares
allotted.
ELECTROLUX ANNUAL REPORT 2020
112 Corporate governance report
Board of Directors and Auditors
STAFFAN BOHMAN
Chairman
JONAS SAMUELSON
President and CEO
Born 1949. Sweden. B.Sc. Econ.
Elected 2018. Member of the
Electrolux Audit Committee and
the Electrolux Remuneration
Committee.
Other assignments: Chairman of
the Board of Research Institute
for Industrial Economics and the
German-Swedish Chamber of
Commerce. Board member of
Atlas Copco AB and member of
the Royal Swedish Academy of
Engineering Sciences (IVA).
Previous positions: President
and CEO of Sapa and DeLaval
as well as Board Member of,
inter alia., Scania AB, Inter-IKEA
Holding NV and Rezidor Hotel
Group AB.
Holdings in AB Electrolux:
85,000 B-shares. 120,279 call
options, issued by Investor AB
entitling the right to purchase
Electrolux B shares.
Born 1968. Sweden. M.Sc.
Econ. Elected 2016.
Other assignments: Board
Member of Polygon AB,
Axel Johnson AB and
Volvo Cars AB.
Previous positions: Various
senior positions within
Electrolux including CFO of
AB Electrolux, COO Global
Operations Major Appliances
and Head of Major Appliances
EMEA. Chief Financial Officer
and Executive Vice President
of Munters AB. Various posi-
tions within General Motors,
mainly in the U.S., and Saab
Automobile AB.
Holdings in AB Electrolux:
64,866 B-shares.
PETRA HEDENGRAN
Born 1964. Sweden. M. of Laws.
Elected 2014. Chairman of
the Electrolux Remuneration
Committee and member of the
Electrolux Audit Committee.
Other assignments: General
Counsel and member of Group
Management of Investor
AB. Board Member of Alecta
and the Association for
Generally Accepted Principles
in the Securities Market (Sw.
Föreningen för god sed på
värdepappersmarknaden).
Previous positions: Attorney
and partner at Advokatfirman
Lindahl. Various positions
within the ABB Financial
Services including General
Counsel of ABB Financial
Services, Nordic Region.
Law Clerk with the Stockholm
District Court. Associate at
Gunnar Lindhs Advokatbyrå.
Holdings in AB Electrolux:
11,000 B-shares.
HENRIK HENRIKSSON
ULLA LITZÉN
Born 1970. Sweden. B.Sc.
in Business Administration.
Elected 2020.
Other assignments: President
and CEO of Scania AB. Board
member of Hexagon AB and
Scania AB
Previous positions: Various
senior positions within Scania
including Export Director in
Scania South Africa Pty Ltd in
Johannesburg, South Africa.
Holdings in AB Electrolux:
425 B-shares.
Born 1956. Sweden. B.Sc.
Econ. and M.B.A. Elected 2016.
Chairman of the Electrolux
Audit Committee.
Other assignments: Board
Member of Epiroc AB,
Husqvarna AB and Ratos AB.
Previous positions: President
of W Capital Management
AB, wholly-owned by the
Wallenberg Foundations.
Various leading positions
within the Investor Group
including Managing Director
and member of Group
Management of Investor AB.
Holdings in AB Electrolux:
4,000 B-shares.
FREDRIK PERSSON
Born 1968. Sweden. M.Sc.
Econ. Elected 2012. Member
of the Electrolux Audit
Committee.
Other assignments:
Chairman of the Board of
JM AB, the Confederation
of Swedish Enterprise (Sw.
Svenskt Näringsliv) and
Ellevio AB. Board Member
of Hufvudstaden AB, ICA
Gruppen AB, Interogo Holding
AG and Ahlström Capital Oy.
Previous positions: Various
leading positions within
Axel Johnson AB including
President and CEO. Head of
Research of Aros Securities AB.
Various positions within ABB
Financial Services AB.
Holdings in AB Electrolux:
5,000 B-shares.
DAVID PORTER
Born 1965. USA. Bachelor’s
degree, Finance. Elected 2016.
Other assignments: Head of
Microsoft Stores, Corporate
Vice President, Microsoft Corp.
Previous positions: Head
of Worldwide Product
Distribution at DreamWorks
Animation SKG. Various
positions within WalMart
Stores, Inc.
Holdings in AB Electrolux:
3,315 B-shares.
KARIN OVERBECK
Born 1966. Germany. M.Sc in
Economics, Marketing and
Finance. Elected 2020
Other assignments: CEO
of Freudenberg Home and
Cleaning Solutions GmbH.
Previous positions: Various
senior positions within the
KAO Corporation as well as in
L’Oréal, Tchibo and Unilever.
Holdings in AB Electrolux:
1,120 B-shares.
KAI WÄRN
Born 1959. Sweden. M.Sc.
in Mechanical Engineering.
Elected 2017. Member of
the Electrolux Remuneration
Committee.
Other assignments: Chairman
of the Board of Electrolux
Professional AB. Board mem-
ber of Sandvik AB.
Previous positions: President
and CEO of Husqvarna AB.
Operations Partner at IK
Investment Partners Norden
AB.
President and CEO of Seco
Tools AB. Various positions
within ABB.
Holdings in AB Electrolux:
4,000 B-shares.
ELECTROLUX ANNUAL REPORT 2020
EMPLOYEE REPRESENTATIVES
MINA BILLING
Born 1980. Representative
of the Federation of Salaried
Employees in Industry and
Services Elected 2020.
Board meeting attendance:
7/12
Holdings in AB Electrolux:
0 shares.
VIVECA
BRINKENFELDT LEVER
Born 1960. Representative of
the Federation of the Salaried
Employees in Industry and
Service. Elected 2018.
Board meeting attendance:
12/12
Holdings in AB Electrolux:
0 shares.
PETER FERM
Born 1965. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2018.
Board meeting attendance:
12/12
Holdings in AB Electrolux:
100 B-shares.
Corporate governance report 113
SECRETARY OF THE BOARD
MIKAEL ÖSTMAN
Born 1967. M. of Laws and B.Sc. Econ. General
Counsel of AB Electrolux.
Secretary of the Electrolux Board since 2017.
Holdings in AB Electrolux: 7,839 B-shares.
COMMITTEES OF THE
BOARD OF DIRECTORS
Remuneration Committee
Petra Hedengran (Chairman),
Staffan Bohman and Kai Wärn.
Audit Committee
Ulla Litzén (Chairman), Staffan Bohman,
Petra Hedengran and Fredrik Persson.
AUDITORS
Deloitte AB
JAN BERNTSSON
Born 1964. Authorized Public Accountant.
Other audit assignments: Boliden AB and
Electrolux Professional AB.
Holdings in AB Electrolux: 0 shares.
At the Annual General Meeting in 2020, Deloitte
AB was re-elected as auditors for a period of one
year until the Annual General Meeting in 2021.
EMPLOYEE REPRESENTATIVES, DEPUTY MEMBERS
ULRIK DANESTAD
Born 1969. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2020.
RICHARD DELLNER
Born 1953. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2013.
Holdings in AB Electrolux:
20 B-shares.
Holdings in AB Electrolux:
500 B-shares.
WILSON QUISPE
Born 1978. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2020.
Holdings in AB Electrolux: 500
B-shares.
Holdings in AB Electrolux are stated as of
December 31, 2020 and includes holdings
of related natural and legal persons, when
applicable.
THE BOARD’S REMUNERATION DURING 2020, MEETING ATTENDANCE AND INDEPENDENCE
Staffan Bohman
Petra Hedengran
Henrik Henriksson2)
Hasse Johansson3)
Ulla Litzén
Karin Overbeck2)
Fredrik Persson
David Porter
Jonas Samuelson
Ulrika Saxon3)
Kai Wärn
Total remuneration 20 20,
'000 SEK
Board meeting
attendance
Remuneration
Committee attendance
Audit Committee
attendance
Indepen dence1)
2,460
950
480
160
920
480
800
640
—
160
740
12/12
12/12
8/12
4/12
10/12
8/12
12/12
11/12
12/12
4/12
11/12
5/5
5/5
1/5
4/5
8/8
8/8
7/8
7/8
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
1) For further information about the independence assessment, see page 105.
2) Henrik Henriksson and Karin Overbeck were elected at the Annual General Meeting in March 2020.
3) Hasse Johansson and Ulrika Saxon declined re-election and resigned from the Board following the Annual General Meeting in March 2020.
ELECTROLUX ANNUAL REPORT 2020
114 Corporate governance report
Group Management
JONAS SAMUELSON
President and CEO
—
Born 1968. Sweden. M.Sc. in
Business Administration and
Economics. In Group Management
and employed since 2008.
Other assignments: Board Member
of Polygon AB, Axel Johnson AB and
Volvo Cars AB.
Previous positions: Various senior
positions within Electrolux including
CFO of AB Electrolux, COO Global
Operations Major Appliances
and Head of Major Appliances
EMEA. Chief Financial Officer and
Executive Vice President of Munters
AB. Various senior positions within
General Motors, mainly in the U.S.,
and Saab Automobile AB.
Holdings in AB Electrolux:
64,866 B-shares.
RICARDO CONS
Head Business Area Latin America,
Executive Vice President
—
Born 1967. Brazil. Bachelor
in Business Administration,
Finance and Marketing, MBA in
Team Management. In Group
Management since 2016 and
employed since 1997–2011
and 2016.
Previous positions: General
Management at Franke in South
America. Various senior positions
at Electrolux Brazil, including
President Small Appliances Latin
America, Sales and Marketing
Director Major Appliances.
Positions in Volvo Brazil..
Holdings in AB Electrolux:
11,705 B-shares.
THERESE FRIBERG
Chief Financial Officer
—
Born 1975. Sweden. B.Sc. in
Business Administration. In Group
Management since 2018 and
employed since 1999.
Previous positions: CFO of
Electrolux Major Appliances
EMEA. Other senior positions
within Electrolux including Head of
Group Business Control and Sector
Controller Home Care & SDA.
Holdings in AB Electrolux:
10,475 B-shares
ADAM CICH
Head Business Area Asia
Pacific, Middle East and Africa,
Executive Vice President
—
Born 1968. Poland. M.Sc. in
Business Administartion. In Group
Management since 2020 and
employed since 1996.
Previous positions: SVP Sales and
Acting Head of Business Area Asia
Pacific, Middle East and Africa.
Head of Sales for Electrolux in
Central and Eastern Europe. Other
senior positions in Electrolux include
leadership positions within sales,
product line in Poland, Russia and
CEE region.
Holdings in AB Electrolux:
8,113 B-shares.
CARSTEN FRANKE
Chief Group Operations Officer,
Executive Vice President
—
Born 1965. Germany. Engineer’s
degree (Dipl.-Ing) in Mechanical
Engineering. In Group
Management since 2020 and
employed since 2005.
Previous positions: Various senior
roles within Electrolux Business Area
Europe including Chief Operations
Officer, Vice President Supply Chain,
Vice President Industrial Operations
and Vice President Electrolux Lean
Manufacturing System. Positions
prior to Electrolux include manage-
ment roles at Knorr-Bremse AG and
Maschinenfabrik Reinhausen.
Holdings in AB Electrolux:
5,000 B-shares.
OLA NILSSON
Chief Experience Officer,
Executive Vice President
—
Born 1969. Sweden. M.Sc.
in International Business
Administration. In Group
Management since 2016 and
employed since 1994.
Previous positions: Various senior
positions within Electrolux including
Head of the Home Care & SDA
business area, Senior Vice President
Product Line Laundry Major
Appliances EMEA and President
Small Appliances Asia Pacific.
Holdings in AB Electrolux:
25,354 B-shares
Holdings in AB Electrolux are stated as of December 31, 2020 and
includes holdings of related natural and legal persons, when applicable.
ELECTROLUX ANNUAL REPORT 2020
Corporate governance report 115
ANNA OHLSSON-LEIJON
Head Business Area Europe,
Executive Vice President
—
Born 1968. Sweden. B.Sc. in Business
Administration and Economics. In
Group Management since 2016
and employed since 2001.
Other assignments: Board member
of Atlas Copco AB.
Previous positions: Chief Financial
Officer of AB Electrolux. Other senior
positions within Electrolux including
CFO of Major Appliances EMEA
and Head of Electrolux Corporate
Control & Services. Chief Financial
Officer of Kimoda. Various positions
within PricewaterhouseCoopers.
Holdings in AB Electrolux:
18,368 B-shares.
NOLAN PIKE
Head Business Area North
America, Executive Vice President
—
Born 1969. USA. Bachelor of
Business Administration, M.B.A. in
Business Management. In Group
Management since 2020 and
employed since 2013.
Previous positions: Senior Vice
President of Electrolux Consumer
Experience Area Taste. Senior
Vice President of North American
Product Lines at Electrolux. General
management, product and sales
positions at GE. Vice President and
General Manager of Kenmore, and
VP/GMM of home appliances at
Sears Holding Corp.
Holdings in AB Electrolux:
7,047 B-shares.
MIKAEL ÖSTMAN
General Counsel,
Senior Vice President
—
Born 1967. Sweden. M. of Laws and
B.Sc. Econ. In Group Management
since 2017 and employed since
2002.
Previous positions: Various senior
positions within Electrolux including
Head of Electrolux Corporate Legal
Department and Head of Electrolux
Legal Affairs Europe. Corporate
Counsel at Telia Mobile AB. Lawyer
at Advokatfirman Vinge. Law Clerk
with the Stockholm District Court.
Holdings in AB Electrolux:
7,839 B-shares.
LARS WORSØE PETERSEN
CHRO & Communications,
Senior Vice President
—
Born 1958. Denmark. M.Sc.
in Economics and Business
Administration. In Group
Management since 2011 and
employed since 1994–2005 and
2011.
Previous positions: CHRO, Senior
Vice President at Husqvarna AB,
2005–2011. Various senior posi-
tions within Electrolux including
Head of Human Resources for
Electrolux Major Appliances North
America and Head of Electrolux
Holding A/S in Denmark..
Holdings in AB Electrolux:
26,787 B-shares.
ELECTROLUX ANNUAL REPORT 2020
116 Corporate governance report
Internal control over financial reporting
The Electrolux Control System (ECS) has been developed to ensure accurate and reliable financial
reporting and preparation of financial statements in accordance with applicable laws and regulations,
generally accepted accounting principles and other requirements for listed companies. The ECS adds
value through clarified roles and responsibilities, improved process efficiency, increased risk awareness
and improved decision support.
The ECS is based on the Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The five components of this framework
are control environment, risk assessment, control activities, monitor and improve and inform and
communicate.
Control environment
The foundation for the ECS is the control environment, which
determines the individual and collective behavior within the
Group. It is defined by policies and directives, man-
uals, and codes, and enforced by the organ-
izational structure of Electrolux with clear
responsibility and authority based on
collective values.
Anti- Corruption Policy, as well as in policies for information,
finance, and in the accounting manual. Together with laws and
external regulations, these internal guidelines form the
control environment and all Electrolux employ-
ees are held accountable for compliance.
The Electrolux Board has overall
responsibility for establishing an
effective system of internal con-
trol. Responsibility for maintain-
ing effective internal controls
is delegated to the President.
The governance structure of
the Group is described on page
102. Specifically for financial
reporting, the Board has estab-
lished an Audit Committee, which
assists in overseeing relevant
policies and important accounting
principles applied by the Group.
urth Q u arte r
Ele
Fo
c t r o l u x Control Syste
First
Q
Risk
assessment
m
u
a
r
t
e
r
Improve
Inform and
communicate
Control
activities
All entities within the Electrolux Group
must maintain adequate internal
controls. As a minimum requirement,
control activities should address key
risks identified within the Group.
Group Management have the
ultimate responsibility for internal
controls within their areas of
responsibility. Group Manage-
ment is described on pages
114–115.
The ECS Program Office, a
department within the Group
Internal Audit function, has devel-
oped the methodology and is
responsible for maintaining the ECS.
The limits of responsibilities and
authorities are given in directives for
delegation of authority, manuals, policies
and procedures, and codes, including the
Code of Conduct, the Workplace Policy, and the
u
Q
To ensure timely completion of these
activities, specific roles aligned with the
company structure, with clear responsibilities
regarding internal control, have been assigned
within the Group.
T
Monitor
h
ir
d
C
ontrol env i r o n m e
arter
S e
a rter
n t
u
d Q
n
o
c
CONTROL ENVIRONMENT — EXAMPLE
Code of Conduct
Minimum standards in the area of environment,
health and safety, labor standards and human
rights. The Code of Conduct is mandatory for
Electrolux units.
Credit Directive
Rules for customer assessment and credit risk
that clarify responsibilities and are the frame-
work for credit decisions.
Internal Control Directive
Details responsibility for internal controls.
Controls should address the Minimum Internal
Control Requirements (MICR) within every appli-
cable process, for example “Order to Cash”.
Group Finance Policy
Details the general framework for how financial
operations shall be organized and managed
within the Group. The policy contains directives
and other mandatory standards issued by the
Group Finance organization.
Delegation of Authority Directive
Details the approval rights, with monetary,
volume or other appropriate limits, e.g.,
approval of credit limits and credit notes.
Accounting Manual
Accounting principles and reporting instruc-
tions for the Group‘s reporting entities are
contained in the Electrolux Accounting Manual.
The Accounting Manual is mandatory for all
reporting units.
ELECTROLUX ANNUAL REPORT 2020
Risk
assessment
Risk assessment
Risk assessment includes identifying risks
of not fulfilling the fundamental criteria, i.e.,
completeness, accuracy, valuation and reporting for significant
accounts in the financial reporting for the Group as well as risk of
loss or misappropriation of assets.
At the beginning of each calendar year, the ECS Program
Office performs a global risk assessment to determine the
reporting units, data centers and processes in scope for the
ECS activities. Within the Electrolux Group, a number of different
processes generating transactions that end up in significant
accounts in the financial reporting have been identified. All
larger reporting units perform the ECS activities.
The ECS has been rolled out to almost all of the smaller units
within the Group. The scope for smaller units is limited in terms of
monitoring as management is not formally required to test the
controls.
Control
activities
Control activities
Control activities mitigate the risks iden-
tified and ensure accurate and reliable
financial reporting as well as process efficiency.
Control activities include both general and detailed controls
aimed at preventing, detecting and correcting errors and irreg-
ularities. In the ECS, the following types of controls are imple-
mented, documented and tested:
• Manual and application controls — to secure that key risks
related to financial reporting within processes are controlled.
• IT general controls — to secure the IT environment for
key applications.
• Entity-wide controls — to secure and enhance the
control environment.
Corporate governance report 117
Monitor
Improve
Monitor and Improve
Monitor and test of control activities is
performed periodically to ensure that
risks are properly mitigated.
The effectiveness of control activities
is monitored continuously at four levels:
Group, business area, reporting unit, and process. Monitor-
ing involves both formal and informal procedures applied by
management, process owners and control operators, including
reviews of results in comparison with budgets and plans, analyti-
cal procedures, and key-performance indicators.
Within the ECS, management is responsible for testing key
controls. Management testers who are independent of the
control operator perform these activities. Group Internal Audit
maintains test plans and performs independent testing of
selected controls. Controls that have failed must be remediated,
which means establishing and implementing actions to correct
weaknesses.
The Audit Committee reviews reports regarding internal con-
trol and processes for financial reporting. Group Internal Audit
proactively proposes improvements to the control environment.
The head of Group Internal Audit has dual reporting lines: to the
President and the Audit Committee for assurance activities, and
to the CFO for other activities.
Inform and
communicate
Inform and communicate
Inform and communicate within the
Electrolux Group regarding risks and
controls contributes to ensuring that the right business
decisions are made.
Guidelines for financial reporting are communicated to
employees, e.g., by ensuring that all manuals, policies and
codes are published and accessible through the Group-wide
intranet as well as information related to the ECS.
To inform and communicate is a central element of the ECS
and is performed continuously during the year. Management,
process owners and control operators in general are respon-
sible for informing and communicating the results within the ECS.
The status of the ECS activities is followed up continuously
through status meetings between the ECS Program Office and
coordinators in the business areas. Information about the status
of the ECS is provided periodically to business area and Group
Management, the Audit Board and the Audit Committee.
ENTERPRISE RISK ASSESSMENT — EXAMPLE
CONTROL ACTIVITIES — EXAMPLE
Closing Routine — Risks assessed
Manage IT — Risks assessed
Order to Cash — Risks assessed
ELECTROLUX ANNUAL REPORT 2020
Risk assessed
Control activity
Process
Closing
Routine
Risk of incorrect financial
reporting.
Manage IT
Risk of unauthorized/incorrect
changes in the IT environment.
Order to Cash Risk of not receiving payment
from customers in due time.
Order to Cash Risk of incurring bad debt.
Reconciliation between general
ledger and accounts receivable sub-
ledger is performed, documented
and approved.
All changes in the IT environment
are authorized, tested, verified and
finally approved.
Customers’ payments are monitored
and outstanding payments are
followed up.
Application automatically blocks
sales orders/deliveries when the
credit limit is exceeded.
118 Corporate governance report
Financial reporting and information
Electrolux routines and systems for information and commu-
nication aim at providing the market with relevant, reliable,
correct and vital information concerning the development of
the Group and its financial position. Specifically for purposes of
considering the materiality of information, including financial
reporting, relating to Electrolux and ensuring timely commu-
nication to the market, an Insider & Disclosure Committee has
been formed.
Electrolux has an information policy and an insider policy
meeting the requirements for a listed company.
Financial information is issued regularly in the form of:
• Full-year reports and interim reports, published as
press releases.
• The Annual Report.
• Press releases on all matters which could have a significant
effect on the share price.
• Presentations and telephone conferences for financial
analysts, investors and media representatives on the day
of publication of full-year and quarterly results.
All reports, presentations and press releases are published at: www.electroluxgroup.com/ir
Stockholm, February 17, 2021
AB Electrolux (publ)
The Board of Directors
Auditor’s report on the Corporate Governance Statement
To the general meeting of the shareholders in AB Electrolux
(publ) corporate identity number 556009-4178
Engagement and responsibility
It is the board of directors who is responsible for the corporate
governance statement for the financial year 2020-01-01 –
2020-12-31 on pages 101–118 and that it has been prepared in
accordance with the Annual Accounts Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s
auditing standard RevR 16 The auditor’s examination of the cor-
porate governance statement. This means that our examination
of the corporate governance statement is different and substan-
tially less in scope than an audit conducted in accordance with
International Standards on Auditing and generally accepted
auditing standards in Sweden. We believe that the examination
has provided us with sufficient basis for our opinions.
Opinions
A corporate governance statement has been prepared. Disclo-
sures in accordance with chapter 6 section 6 the second para-
graph points 2–6 the Annual Accounts Act and chapter 7 section
31 the second paragraph the same law are consistent with the
annual accounts and the consolidated accounts and are in
accordance with the Annual Accounts Act.
Stockholm, February 17, 2021
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and the
Swedish language original, the latter shall prevail.
Factors affecting forward-looking statements
This annual report contains “forward-looking” statements within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Such statements include, among others, the financial goals and targets
of Electrolux for future periods and future business and financial plans.
These statements are based on current expectations and are subject to
risks and uncertainties that could cause actual results to differ materially
due to a variety of factors. These factors include, but are not limited to the
following; consumer demand and market conditions in the geographical
areas and industries in which Electrolux operates, effects of currency
fluctuations, competitive pressures to reduce prices, significant loss of
business from major retailers, the success in developing new products
and marketing initiatives, developments in product liability litigation, pro-
gress in achieving operational and capital efficiency goals, the success
in identifying growth opportunities and acquisition candidates and the
integration of these opportunities with existing businesses, progress in
achieving structural and supply-chain reorganization goals.
ELECTROLUX ANNUAL REPORT 2020
Remuneration Report 2020 119
Remuneration Report 2020
Introduction
This report describes how the guidelines for executive remuneration of AB Electrolux, adopted by the
Annual General Meeting 2020, were implemented in 2020. The report also provides information on
remuneration to the President & CEO and a summary of the company’s outstanding share-related
incentive plans. The report has been prepared in accordance with the Swedish Companies Act and the
Rules on Remuneration of the Board and Executive management and on Incentive Programmes issued
by the Swedish Corporate Governance Board.
Further information on executive remuneration is available in
Note 27 on pages 71–73 in the Annual Report 2020. Information
on the work of the remuneration committee in 2020 is set out in
the Corporate Governance Report available on pages 101–118
in the Annual Report 2020.
Remuneration of the Board of Directors is not covered by this
report. Such remuneration is resolved annually by the Annual
General Meeting and disclosed in Note 27 and in the Corporate
Governance Report in the Annual Report 2020.
Key developments 2020
The CEO summarizes the company’s overall performance in his
statement on page 5–13 in the Annual Report 2020.
Electrolux remuneration guidelines
Electrolux has a clear strategy to deliver profitable growth and
create shareholder value. A prerequisite for the successful imple-
mentation of the company’s business strategy and safeguard-
ing of its long-term interests, including its sustainability, is that
the company is able to recruit and retain qualified personnel.
To this end, it is necessary that the company offers competitive
remuneration in relation to the country or region of employ-
ment of each Group Management member. The remuneration
guidelines enable the company to offer the Group Manage-
ment a competitive total remuneration. More information on the
company’s strategy can be found on the company’s website.
The remuneration terms shall emphasize ‘pay for perfor-
mance’, and vary with the performance of the individual and the
Group. The total remuneration for the Group Management shall
be in line with market practice and may comprise the following
components: fixed compensation, variable compensation, pen-
sion benefits and other benefits.
The guidelines are found on pages 32 in the Annual Report
2020. During 2020, the company has complied with the applica-
ble remuneration guidelines adopted by the General Meeting.
No deviations from the guidelines have been decided and
no derogations from the procedure for implementation of the
guidelines have been made. The auditor’s report regarding the
company’s compliance with the guidelines is available on
www.electroluxgroup.com. No remuneration has been
reclaimed. In addition to remuneration covered by the remu-
neration guidelines, the General Meetings of the company have
resolved to implement long-term share-related incentive plans.
Remuneration for the President & CEO, Jonas Samuelson in 2020 ('000 SEK unless otherwise stated)1)
Fixed renumeration
Variable renumeration
Extraordinary items Pension expense6)
Total renumeration
Base
salary2)
11,553
Other
benefits3)
One-year
variable4)
Multi-year
variable5)
9
10,378
154
0
3,993
26,087
Proportion of
fixed and variable
renumeration
Variable: 40%
Fixed: 60%
1) Except for multi-year variable remuneration, the table reports remuneration earned in 2020. Multi-year variable remuneration is reported if vested in 2020.
2) Includes vacation salary and salary deductions for company car.
3) Includes other benefits such as travel allowance, health care benefit and mileage compensation..
4) Variable salary earned 2020 and paid in 2021.
5) Calculated as number of shares in LTI 2018 that vested on December, 31, 2020 (804 shares) multiplied by the share price of Electrolux B shares onDecember 31, 2020 (SEK 191.35)
6) Pension is a defined contribution of 35% of annual base salary (excluding vacation salary and salary deductions for company car).
Remuneration for the President & CEO, Jonas Samuelson in 2019 ('000 SEK unless otherwise stated)1)
Fixed renumeration
Variable renumeration
Extraordinary items6) Pension expense7)
Total renumeration
Base
salary2)
11,591
Other
benefits3)
One-year
variable4)
Multi-year
variable5)
10
2,213
9,479
1,901
3,993
29,187
Proportion of
fixed and variable
renumeration
Variable: 47%
Fixed: 53%
1) Except for multi-year variable remuneration, the table reports remuneration earned in 2019. Multi-year variable remuneration is reported if vested in 2019.
2) Includes vacation salary and salary deductions for company car.
3) Includes other benefits such as travel allowance, health care benefit and mileage compensation.
4) Variable salary earned 2019 and paid in 2020.
5) Calculated as number of shares in LTI 2017 that vested on December, 31, 2019 (41,229 shares) multiplied by the share price of Electrolux B shares on December 31, 2019 (SEK 229.9).
6) Includes an extraordinary incentive related to the separation of Electrolux Professional AB.
7) Pension is a defined contribution of 35% of annual base salary (excluding vacation salary and salary deductions for company car).
ELECTROLUX ANNUAL REPORT 2020
120 Remuneration Report 2020
Share-based remuneration
Outstanding share-related incentive plans
Over the years, Electrolux has implemented several long-term
incentive programs (LTI) for senior managers. These programs
are intended to attract, motivate, and retain the participating
managers by providing long-term incentives through benefits
linked to the company’s share price. They have been designed
to align management incentives with shareholder interests.
The company had during 2020 three ongoing performance-
share programs (2018, 2019 and 2020). The allocation of shares
in the 2018 and 2019 programs is determined by the position
level and the outcome of three financial objectives; (1) earnings
per share, (2) return on net assets and (3) organic sales growth.
Performance outcome of the three financial objectives has been
determined by the Board after the expiry of the respective one-
year performance period for these programs. The allocation of
shares in the 2020 program is determined by the position level
and the outcome of three objectives; (1) earnings per share,
(2) return on net assets and (3) CO2 reduction. Performance
outcome of (1) and (2) will be determined by the Board after the
expiry of the one-year performance period and (3) after the
expiry of the three-year performance period.
For the 2018, 2019 and 2020 programs allocation is linear from
minimum to maximum. There is no allocation if the minimum level
is not reached. If the maximum is reached, 100% of shares will be
allocated. Should the achievement of the objectives be below
the maximum but above the minimum, a proportionate alloca-
tion will be made. The shares will be allocated after the three-
year period free of charge.
If a participant’s employment is terminated during the three-
year program period, the participant will be excluded from the
program and will not receive any shares or other benefits under
the program. However, in certain circumstances, including for
example a participant’s death, disability, retirement or the dives-
titure of the participant’s employing company, a participant
could be entitled to reduced benefits under the program.
Each of the 2018, 2019 and 2020 program covers 253 to 282
senior managers and key employees in almost 30 countries.
Participants in the programs comprise six groups, i.e., the Presi-
dent, other members of Group Management, and four groups of
other senior managers. All programs comprise Class B shares.
Additional information about the outstanding LTI programs can
be found in Note 27 in the Annual Report 2020.
Share award plans (for the President & CEO)
The main conditions of share award plans
Specification
of plan
Performance
period
Award
date²)
Vesting
Date
End of
retention
period
LTI 2018³)
LTI 2019⁵)
LTI 2020⁶)
TOTAL
2018
2019
2020-2022
18-04-19
19-05-28
20-11-11
20-12-31
21-12-31
22-12-31
20-12-31
21-12-31
22-12-31
Opening
balance
Share
awards
held at the
beginning
of the year
804
0
Information regarding the reported financial year¹)
During the year
Closing balance
Awarded
Vested
Subject to a
performance
condition
Awarded and
unvested at
year end
Subject to
a retention
period
0
0
63,2627)
804⁴)
0
0
804
63,262
804
0
0
0
0
12,6538)
12,653
50,609⁹)
50,609
0
0
0
1) In 2020, LTI 2018 vested, resulting in 804 shares for the CEO that will be paid out in the first half of 2021. No changes occurred regarding LTI 2019.
2) Refers to the date when the share awards was awarded to the participant.
3) The maximum number of shares that could be awarded under LTI 2018 for the CEO was 47,605 shares, the outcome of LTI 2018 resulted in 804 shares for the CEO. The vested number of shares
was adjusted for the distribution of Electrolux Professional AB.
4) Value at vesting Date: 154 thousand SEK, calculated as the market price per share multiplied by the number of vested shares.
5) The maximum number of shares that could be awarded under LTI 2019 for the CEO was 53,543 shares, the outcome of LTI 2019 resulted in 0 shares for the CEO.
6) The maximum number of shares that may be awarded under LTI 2020 is 63,262 for the CEO, the outcome with respect to the financial performance tagets resulted in 50,609 shares for the CEO.
The outcome of the CO2-reduction target will be determined after the expiry of the three year performance period.
7) Value at Award Date: 13,026 thousand SEK, calculated as the market price per share multiplied by the number of awarded shares.
8) Shares subject to CO2 reduction performance target in LTI 2020.
9) Value at Award Date:10,420 thousand SEK calculated as the market price per share multiplied by the number of awarded shares.
Application of performance criteria
The performance measures for the CEO’s variable remunera-
tion have been selected to deliver the company’s strategy and
to encourage behaviour which is in the long-term interest of the
company. In the selection of performance measures, the stra-
tegic objectives and short- and long-term business priorities for
2020 have been taken into account. The non-financial perfor-
mance measures further contribute to alignment with sustain-
ability as well as the company values.
ELECTROLUX ANNUAL REPORT 2020
Remuneration Report 2020 121
Performance of the President & CEO in the reported financial year: variable cash remuneration
Description of the criteria related to
the remuneration component
Relative weighting of the
performance criteria
a) Measured performance and
b) actual award/ remuneration outcome ('000 SEK)
Group EBIT Absolute Growth (%)
Year over year growth (%) in absolute operating income
Group Net Operating Working Capital (%)
NOWC divided by External Net Sales (12 months rolling)
Group Contribution to Fixed Growth (%)
Year over year growth (%) in absolute CTF (External Net Sales with Variable
Costs deducted) .
Group Consumer star rating
The average rating of Electrolux products in consumer reviews on around
200 web sites, considering reviews written in the last 6 months of the
calendar year, on a 0-5 scale.
1) Including adjustments for acquisitions and divestments.
50%
20%
20%
10%
a) +38.3%1)
b) 5,740
a) 5.0%
b) 2,296
a) +5.2%1)
b) 1,194
a) 4.55
b) 1,148
Performance of the President & CEO in the reported financial year: share-based incentives
Name of
plan
Description of the criteria related to
the remuneration component
Relative weighting of the
performance criteria
a) Measured performance and
b) actual award/ remuneration outcome ('000 SEK)
LTI 20 20
Earnings Per Share
Income for the period attributable to equity holders of the Parent
Company divided by the average number of shares excluding
shares held by Electrolux.
Return On Net Assets
Operating income (annualized) expressed as a percentage of
average net assets
CO2 Reduction
Greenhouse gas reductions within the following three areas:
(i) manufacturing, (ii) energy for product use, and (iii) use of
hydrofluorocarbons (HFCs), measured on selected predefined
product categories and regions.
60%
20%
a) 13.91)
b) 7,2632)
a) 22.7%1)
b) 2,4213)
20%
a) To be determined at year end 2022
b) To be determined at year end 2022
1) Including adjustments for acquisitions and divestments.
2) Based on market price per share at December 31, 2020 (SEK 191.35) multiplied by the number of shares (37,956). The shares will not vest until the first half of 2023.
3) Based on market price per share at December 31, 2020 (SEK 191.35) multiplied by the number of shares (12,653). The shares will not vest until the first half of 2023.
Comparative information on the change of remuneration and company performance
Remuneration and company performance ('000 SEK)1)
Annual change
Jonas Samuelson, President & CEO
Group Operating Income (EBIT) margin (%)3)
Average remuneration on
a full time equivalent basis of employees4) of AB Electrolux
1) Remuneration earned in the respective years.
2) Remuneration for President & CEO was 10.6% (3,100 thousand SEK) lower in 2020 compared with 2019.
3) The Group Operating Income margin (excluding non-recurring items) was 2.7% in 2019 vs 5.0% in 2020.
4) Excluding members of group management.
2020 vs. 2019
–3,100 (–10.6%)2)
+2.3 percentage
points
–13 (–1.1%)
2020
26,087
5.0%
1,168
ELECTROLUX ANNUAL REPORT 2020
122 Events and reports
Events and reports
The Electrolux website www.electroluxgroup.com/ir contains additional
and updated information about such items as business development, strategy and the
Electrolux share, as well as a platform for financial statistics.
Q4Results
2020
presentation
Electrolux Interim Reports
www.electroluxgroup.com/ir
Electrolux
Annual Report 2020
Electrolux Annual Report 2020
www.electroluxgroup.com/annualreport2020
Electrolux Capital Markets Update 2020
www.electroluxgroup.com/CMU
Electrolux for investors
www.electroluxgroup.com/ir/for-investors
Electrolux Sustainability Report (GRI) 2020
www.electroluxgroup.com/sustainabilityreport2020
Financial reports and major events in 2021
2
Feb
25
Mar
28
Apr
20
Jul
27
Oct
Consolidated
report
Annual
General Meeting
Interim report
January–March
Interim report
January–June
Interim report
January–September
Electrolux subscription service can be accessed at
www.electroluxgroup.com/subscribe
Investor Relations www.electroluxgroup.com/ir
ELECTROLUX ANNUAL REPORT 2020
Events and reports 123
Annual General Meeting
The Annual General Meeting will be on Thursday, March 25, 2021.
Due to the coronavirus pandemic, the Board of Directors has
decided that the Annual General Meeting should be conducted
without the physical presence of shareholders, representatives
or third parties and that the shareholders before the meeting
should be able to exercise their voting rights only by voting in
advance, so-called postal voting. However, the shareholders
will be able to ask questions in writing ahead of the meeting. The
questions and answers will be published on the group’s website
www.electroluxgroup.com/agm2021 at least 5 days before the
Annual General Meeting together with a webcast with the Chair-
man and the CEO including their reflections on 2020.
Participation
A person who wishes to participate in the Annual General Meet-
ing by postal voting must
• be listed as a shareholder in the presentation of the share reg-
ister prepared by Euroclear Sweden AB concerning the circum-
stances on Wednesday, March 17, 2021, and
• give notice of intent to participate no later than on Wednesday,
March 24, 2021, by casting its postal votes in accordance with
the instructions under the heading Postal voting below so that
the postal voting form is received by Euroclear Sweden AB no
later than that day.
In order to be entitled to participate in the meeting, a share-
holder whose shares are registered in the name of a nominee
must, in addition to giving notice of participation in the Annual
General Meeting by submitting its postal vote, register its shares
in its own name so that the shareholder is listed in the presen-
tation of the share register as of the record date Wednesday,
March 17, 2021. Such re-registration may be temporary (so-
called voting rights registration), and request for such voting
rights registration shall be made to the nominee, in accordance
with the nominee’s routines, at such time in advance as decided
by the nominee. Voting rights registration that have been made
by the nominee no later than Friday, March 19, 2021 will be taken
into account in the presentation of the share register.
Postal voting
The Board of Directors has decided that shareholders should be
able to exercise their voting rights only by postal voting in accor-
dance with section 22 of the Act (2020:198) on temporary excep-
tions to facilitate the execution of general meetings in companies
and other associations. A special form must be used for the postal
vote. The form for postal voting is available on the Group's website
www.electroluxgroup.com/agm2021. Completed and signed
forms for postal voting can be sent by mail to AB Electrolux (publ),
c/o Euroclear Sweden, Box 191, SE-101 23 Stockholm, Sweden
or by e-mail to GeneralMeetingServices@euroclear.com. Com-
pleted forms must be received by Euroclear no later than March
24, 2021. Shareholders who are natural persons may also cast
their votes electronically through verification with BankID via
the Euroclear Sweden AB’s website https://anmalan.vpc.se/
EuroclearProxy. Such electronic votes must be submitted no later
than March 24, 2021.
The shareholders may not provide special instructions or
conditions to the postal vote. If so, the entire postal vote is invalid.
Further instructions and conditions can be found in the postal
voting form and at https://anmalan.vpc.se/EuroclearProxy
Powers of attorney
If the shareholder submits its postal vote by proxy, a written and
dated Power of Attorney signed by the shareholder must be
attached to the postal voting form. Proxy forms are available on
the Group's website www.electroluxgroup.com/agm2021. If the
shareholder is a legal person, a registration certificate or other
authorization document must be attached to the form.
Dividend proposal
The Board of Directors proposes a dividend for the fiscal year
2020 of SEK 8.00 (7.00) per share, for a total dividend payment of
approximately SEK 2,299m (2,012). The proposed dividend corre-
sponds to approximately 58% of income for the period, continuing
operations. Last year’s dividend corresponded to approximately
80% of income for the period, total Group (including discontinued
operations). The dividend is proposed to be paid in two equal
installments, the first with the record date Monday, March 29, 2021,
and the second with the record date Wednesday September
29, 2021. The first installment is estimated to be paid on
Thursday, April 1, 2021 and the second installments on Monday,
October 4, 2021.
Proposal for election of board members
The Nomination Committee has proposed re-election of
Staffan Bohman, Petra Hedengran, Henrik Henriksson,
Ulla Litzén, Karin Overbeck, Fredrik Persson, David Porter and
Jonas Samuelson as board members. Kai Wärn has declined
re-election. Staffan Bohman was proposed to be re-elected as
Chairman of the Board of Directors.
DATES REGARDING THE AGM 2021
2020
2021
September
February
March
April
September
October
1 Estimated date
for payment of
first installment of
dividend
29 Proposed record
date for second
installment of the
dividend payment
4 Estimated date
for payment of
second installment
of dividend
22 Nomination
Committee
appointed for
AGM 2020
1 Proposals from
Nomination
Committee
presented
15 Notice to AGM
published
17 Deadline for
registration in
shareregister
24 Deadline for
notice of intent to
participate in AGM
and registration in
share register
25 AGM 2020
29 Proposed record
date for the first
installment of the
dividend payment
ELECTROLUX ANNUAL REPORT 2020
Creating value
Sustainable consumer experience
innovation is a key driver for long term
profitable growth, enabling users to
prepare great-tasting food, care for
clothes so they stay new for longer and
achieve healthy wellbeing at home. These
innovations are offered under three main,
well-established brands, Electrolux, AEG
and Frigidaire.
Profitable growth is also enabled by
consistently increasing operational
efficiency through digitalization,
automation and modularization. Focus
on sustainability is an integral part of
Electrolux strategy.
ELECTROLUX ANNUAL REPORT 2020
Mailing address: SE-105 45 Stockholm, Sweden | Visiting address: S:t Göransgatan 143, Stockholm
Telephone: +46 8 738 60 00 | Website: www.electroluxgroup.com
AB ELECTROLUX (PUBL), 556009-4178